Australian Insurers Falling Behind in Cyber Risk Preparedness

The survey, now in its tenth iteration, gathered insights from 698 insurance executives across 42 territories, including 37 from Australia. The data indicates that Australian insurers scored 6.6% lower on the Preparedness Index compared to their global peers. Additionally, the Banana Skins Index, which measures industry perception of risks, decreased by 6% over two years, suggesting a potential adaptation pattern or risk fatigue within the Australian market.

Digital security threats continue to top the list of identified risks in Australia. However, technology concerns have surged to second place, climbing four positions since 2023. Notably, AI has emerged as a major concern, advancing from 11th place to third position in just two years.

Antonie Jagga, leader of PwC’s insurance operations in Australia, commented on the rapid evolution of these risks: “Risks related to cyber, technology, and AI are accelerating at a speed we haven’t seen before in the insurance industry. This is creating a preparedness gap that didn’t exist two years ago, and we are seeing that Australian insurers are feeling less prepared to manage these challenges compared to their global peers.”

Jagga further emphasized the swift rise of AI as a risk factor: “Two years ago, AI wasn’t even in our top 10 risks. Today, it’s number three and climbing fast, but our research shows the sector’s preparedness is declining while global peers have improved.”

This trend underscores the urgent need for Australian insurers to bolster their risk management frameworks, invest in advanced cybersecurity measures, and enhance their understanding of AI-related threats. Failure to do so could leave the industry vulnerable to increasingly sophisticated cyber attacks and technological disruptions.

For policyholders, this development highlights the importance of choosing insurers that prioritize robust risk management practices and demonstrate a proactive approach to emerging threats. As the digital landscape evolves, ensuring that your insurer is equipped to handle these challenges becomes crucial in safeguarding your personal and business interests.