By Insurance Banana Skins 2025 Survey,Norma Connolly
Copyright caymancompass
Technological challenges, including cybercrime and the misuse of artificial intelligence, are among the top risks to the insurance industry, a new survey has found.
The PwC Insurance Banana Skins survey, which is published every second year, indicated that, for the first time in the survey’s 14-year history, the top three risks for the sector globally are dominated by technology-related concerns.
As well as threats from cyber-criminals, considered the number one risk, and the misuse or poor governance of AI, the second highest risk, the survey, done in partnership by PwC and the London Foundation for Banking and Finance, found that failure to keep pace with technological change was the third most urgent risk.
This was the third consecutive time cybercrime has made it to the top spot in the risks list, with a “severity score” at an “all-time high, driven by the increasing frequency and sophistication of attacks, the proliferation of ransomware-as-a-service, and amplified anxiety towards the disruptive potential of generative AI in the wrong hands”, PwC noted in a press release about the survey findings.
The fastest-rising risk was found to be misuse of artificial intelligence, with industry concerns focusing on the potential for AI-driven fraud and possibility of regulatory breaches due to inadequate internal controls.
“While AI clearly presents transformative opportunities for the insurance industry, the report warns that failing to harness its potential could itself become a critical risk,” PwC said.
The third-ranked risk, failing to keep up with technological advances, the report stated, reflects long-standing challenges around legacy IT systems and the cost of modernisation.
“Companies know they are losing money through inefficiencies, but are hesitating to commit to updates that may soon be outdated. Because of this, some in the industry see this ‘banana skin’ as less of a risk to the industry, and more one for individual firms – moving forward in this space is a competitive differentiator, at the expense of those slow to adapt,” PwC said.
Three insurance companies in Cayman took part in the survey, which canvassed nearly 700 practitioners and close observers across 42 territories.
Cayman remaining ‘vigilant’
The Cayman Islands Insurance Association, in response to the survey findings, said the local industry was taking measures to help protect itself from the risks that are facing companies worldwide.
An association spokesperson told the Compass, “As the insurance industry navigates an era of rapid technological change, we must remain vigilant against the growing threats of cybercrime and the misuse of artificial intelligence.
“Poor governance of AI systems not only risks undermining consumer trust but also exposes insurers to regulatory and reputational harm. The Cayman Islands Insurance Association is committed to advancing responsible innovation by promoting strong cybersecurity measures and the ethical, accountable use of AI technologies – ensuring our market remains aligned with international standards and continues to protect policyholders effectively.”
Ric Agrella, a partner at PwC Cayman Islands, said in the release that the survey had revealed a “decisive shift in industry priorities, with technology-related risks now making up the top three on the list of concerns for the global insurance sector”.
He added, “Regardless of maturity or market strength, insurers worldwide are increasingly exposed to the disruptive forces of technological change. With cyber-crime remaining the top risk, and misuse of AI and failure to modernize effectively closely following as top of mind for insurance executives, it further emphasizes the need for agility and investment in transformation necessary to stay competitive, achieve desired outcomes and as importantly, a peace of mind.
“It is evident that sustained success in this evolving landscape demands strategic responsiveness to geopolitical and digital developments, and a relentless drive to stay ahead in a rapidly transforming industry.”
Author of the Insurance Banana Skins 2025 survey report, Keyur Patel, pointed out that the environment in which the insurance industry operates is changing faster than ever, and insurers will need to challenge some fundamental assumptions about, for example, their vulnerability to cyber-attacks, the immediacy of climate risks and what the future of insurance looks like in a world increasingly defined by AI.
“How do insurers stay relevant to customers?” he asked. “Are existing business models fit for purpose? The tone of the responses we received suggest that when risks are known, the industry is often well prepared – but the looming unknows could ultimately define its future.”
