Page 17 - Turkinsurance Digital Magazine

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Cyber-Crime at the Top: Risks Escalate Industry Preparedness

According to the PwC and CSFI survey, cyber-crime remains On a scale of 1-5, respondents rated preparedness at 3.24,
insurers’ greatest concern for the third consecutive edition, with indicating moderate confidence. While firms feel prepared for
severity reaching historic levels. Increasingly sophisticated attacks traditional risks, many are less confident in navigating a rapidly
and the rise of “ransomware-as-a-service” models, alongside the changing digital landscape.
misuse of generative AI, have intensified the threat. Respondents
emphasize that cyber-attacks are not a matter of if but when. Larger firms and certain regions report stronger preparedness,
Insurers face a dual challenge: they are both targets (due to while reinsurance companies scored lower, revealing significant
sensitive data, payment flows, and underwriting information) and gaps in risk management capabilities across the sector.
service providers to sectors under attack themselves. Operational
resilience, vendor management, and cloud security have become Implications for Insurers and Stakeholders
board-level priorities.
• Strategic urgency: Digital transformation and cyber resilience
Artificial Intelligence: The Fastest-Rising Risk are now strategic priorities.
• Governance over technology: AI and cyber risks require strong
AI misuse climbed to the second position, up from seventh in 2023, governance, accountability, and ethical standards.
marking the fastest rise in the rankings. AI is not only a standalone • Modernization: Firms must modernize legacy systems carefully,
risk but also a multiplier of cyber-crime, fraud, and regulatory considering both cost and obsolescence.
breaches. • Customer-centricity: Insurers need to monitor affordability and
Key concerns include: maintain social license.
• Generative AI enabling fraud through deep-fakes or synthetic • Regulatory evolution: Regulation should enable innovation
identities. while safeguarding the market.
• Poor governance or opaque AI models creating regulatory, • Differentiation opportunity: Agile firms with robust governance
reputational, and operational risks. will gain a competitive edge, while laggards may struggle to
• Failure to adopt AI effectively, leaving firms vulnerable to more survive.
agile competitors.
Thus, insurers must balance technological investment with robust The insurance industry faces a digital moment of truth. Traditional
governance, ethical frameworks, and a culture of responsible underwriting, claims management, and pricing are now intertwined
experimentation. with digital risks and opportunities. PwC’s Insurance Banana
Skins 2025 survey shows that cyber-crime dominates, AI misuse is
Modernization Challenges: A Structural Drag rapidly rising, and failure to modernize remains a structural drag,
all compounded by economic and regulatory pressures.
The third-ranked risk is the inability to keep up with technological
change. Legacy IT systems, high modernization costs, and The message is clear: incremental change is no longer enough.
integration challenges continue to hinder efficiency. Many firms Boards must ask not just, “Are we compliant?” but also, “Are we
hesitate to invest in new systems due to the fear that technology resilient and relevant in a fast-changing world?” Insurers that treat
will become outdated quickly. technology as a strategic priority can shape the next chapter of
global insurance; those that ignore it may fall behind.
This creates both competitive and systemic risks: firms that fail to
adapt may lose market share and struggle to meet modern customer • 3.99 4 Cybercrime is the top risk, with a severity score of 3.99/5.
expectations.
• 3.79 4 AI risk has surged to second place, scoring 3.79/5.
Economic and Regulatory Pressures
• 698 4 insurance professionals from 42 territories contributed
Economic risks have risen, with macroeconomic factors like to the survey.
inflation, uncertain interest rates, and geopolitical instability
making risk planning and pricing more difficult. • 43% 4 of responses
came from European
Affordability has become a concern: as living costs rise, insurance respondents.
may become less accessible, threatening risk pooling and the
sector’s reputation.

Regulatory issues also remain prominent. Frameworks are
struggling to keep pace with emerging risks such as AI and cyber
threats. Complex overlapping rules can increase compliance
burdens and hinder innovation. Risk-based and forward-looking
regulation is highlighted as a critical need.