As the sector grapples with shifts driven by artificial intelligence, geopolitical tensions, cyber threats, and climate change, the Insurance Banana Skins 2025 report offers essential insights and identifies the top risks and emerging challenges facing the industry.
With market fragility and complexity at an all-time high, the report underscores the critical need for strategic adaptability, operational resilience and innovative approaches to risk management as the industry stands at the crossroads of opportunity and uncertainty.
Now in its 10th edition, the report draws on the perspectives of 698 practitioners and close observers of the industry across 42 territories and is produced in conjunction with the Centre for the Study of Financial Innovation (CSFI).
Insurance Banana Skins 2025
A survey of risks faced by insurers
The top 5 Insurance Banana Skins for 2025
- 1. Cyber crime
- 2. Artificial intelligence
- 3. Technology
- 4. Macro-economy
- 5. Climate change
1. Cyber crime
(2023 ranking, 1)
Insurance industry grapples with escalating cyber crime risks
Cyber crime remains the foremost threat facing insurers, consistently topping the list for three consecutive years. This reflects intense global apprehension over sophisticated cyber threats targeting multiple industries. Respondents underscore the inevitability of attacks and the mounting pressure to combat AI-driven cyber crime.
“Rapidly evolving cyber-attack capabilities make this risk very hard to fully mitigate – it's a continual arms race.”
2. Artificial intelligence
(2023 ranking, 7)
AI emerges as a top risk, reshaping the insurance landscape
AI's rapid ascent as a risk mirror concerns about its dual nature – the opportunity it offers versus its potential for misuse. Last year, AI ranked seventh; its rise to second highlights the pervasive impact of generative AI and the challenge of aligning governance with technological pace. The pressure to integrate AI faster than internal controls can evolve is palpable.
“The speed of AI adoption is outpacing internal controls in many firms – clear governance, traceability, and ethical use frameworks are urgently needed.”
3. Technology
(2023 ranking, 4)
Technology risk remains a top concern for insurers
The challenge presented by technological change persists, climbing from fourth to third in this year’s ranking. Insurers face difficulties in adapting to rapid advances, aggravated by reliance on outdated IT systems and the resulting inefficiencies. The cost implications of upgrading legacy systems further complicate the landscape, posing a barrier to innovation.
“Knowing what tech architecture approach to follow and how to effectively deploy will be a challenge for insurers to get right.”
4. Macro-economy
(2023 ranking, 6)
Inflation and geopolitical tensions top macroeconomic concerns
As macroeconomic uncertainty climbs the ranks from sixth to fourth, the industry reckons with the complexities of inflation, interest rate volatility, and geopolitical instability. These factors hamstring strategic planning and financial forecasting, intensifying focus on adaptive strategies in response to economic headwinds.
“The risk of resurgence in inflation could come from deglobalisation, trade wars or unsustainable public finances.”
5. Climate change
(2023 ranking, 3)
Climate change impacts force insurers to adapt
Climate change continues to pose formidable challenges, particularly for Property & Casualty (P&C) insurers and reinsurers, though it has slipped from third to fifth position. The surge in extreme weather events underscores the urgency of reassessing risk models and developing adaptive strategies amid mounting claims payouts.
“The increasing frequency and severity of extreme weather events are making it harder for insurers to accurately price policies and manage their exposure.”
Emerging and noteworthy risks facing the industry
The Insurance Banana Skins 2025 report has identified a tapestry of interconnected challenges shaping the industry's future.
The tension surrounding regulatory change is palpable, as insurers grapple with adapting to rapidly evolving technological landscapes. This, coupled with persistent undercurrents of macroeconomic volatility, complicates compliance efforts and is burdening firms with significant operational costs.
Political instability further exacerbates economic barriers and trade disruptions – intertwined with credit risk concerns – meaning that firms face the threat of counterparty defaults against a backdrop of geopolitical tensions.
Social trends, such as demographic changes and evolving consumer expectations, challenge traditional actuarial assumptions. Insurers must reimagine their models and strategies to align with shifting market dynamics, harnessing emerging technologies to stay competitive amidst intensifying pressure.
Reputation and competition, though less urgent, remain critical considerations as firms strive to enhance their market position through innovation, efficiency, and public engagement.
Contact us
Partner, Leader Financial Services Risk Consulting & Internal Audit, PwC Switzerland
