What are the top risks facing the insurance industry?

Insurance Banana Skins 2023

We have once again sponsored the Insurance Banana Skins 2023 survey in conjunction with the Centre for the Study of Financial Innovation (CSFI), which details the risks facing the insurance sector across the globe in the next 2-3 years.

Now on its 9th edition, this survey describes the most urgent risks, or "Banana Skins", facing the global insurance industry in the latter half of 2023 as seen by a sample of 589 practitioners and close observers, in 39 territories.

Download the report Insurance Banana Skins 2023: What are the top risks facing the Insurance industry?

Top themes

The last edition of the Insurance Banana Skins focussed on the impact of Covid, with top risks being amplified by the pandemic, but showing the industry being incredibly resilient. Fast forward two years and the risks associated with the pandemic are far less of a worry. Whilst the top risks are broadly similar to the last edition, we have seen fundamental shifts in the way people work, accelerated advances in technology, and significant economic shocks.

Technology - friend AND foe

Technology has continued to develop at speed, most notably in AI which was a new risk added to this year’s survey, scoring highly. We all see the potential this has to revolutionise our industry and the way we operate. However, like all things, the associated risks, for example AI bias, or through further increasing the opportunity for cyber criminals to target organisations, must be appropriately managed. Cyber crime is the highest rated risk for the second year running, highlighting the challenge insurers face to stay ahead of sophisticated criminal enterprises.

Increasing impact of climate change & evolving regulation

Following the hottest month globally since records began, in July 2023, it is unsurprising to see climate change continue to rise in the list of risks. Climate change is one of the biggest challenges we face as a global society. This will remain a key focus for Boards, and this is expected to continue to increase in severity as a risk.

Climate change, and the broader ESG agenda has brought with it further regulatory developments, such as the introduction of the Corporate Sustainability Reporting Directive. This year's survey also identifies regulation more broadly as a primary concern for the market, which I expect is driven by both the pipeline of regulatory change across the globe and the expanding toolkit regulators are deploying to enforce regulation.