Cybercrime remains the top risk for Australian insurers, while technology, artificial intelligence and political risk have jumped up the rankings, a biennial PwC survey shows.

The global Insurance Banana Skins report, identifying risks perceived as most urgent, also shows local companies lagging on preparedness.

“Risks related to cyber, technology and AI are accelerating at a speed we haven’t seen before in the insurance industry,” PwC Australia insurance leader Antonie Jagga said. “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.”

In Australia, technology has jumped four places to second in the ranking, and AI has leapt eight places to third.

Political risk is up to fourth from eighth, reflecting government and regulatory scrutiny amid rising premiums and coverage restrictions in cyclone- and flood-prone regions, and as geopolitical uncertainty in major markets grows.

“Affordability remains the defining theme going into 2026, and we’ve seen that translate into elevated political risk,” Mr Jagga said.

“Insurers need to demonstrate they’re using technology not just to manage their own risks but to make cover more accessible and affordable for Australians, particularly in high-risk areas.”

Rounding out the Australian top 10 are regulatory change, reputation, change management, suitability of regulation, macroeconomy and climate change.

The global top 10 are cybercrime, AI, technology, macroeconomy, climate change, regulatory change, human talent, change management, political risk and suitability of regulation.

The preparedness index shows Australian insurers 6.6% behind global peers, which PwC says is the widest gap in years.

Mr Jagga says insurers can respond to external challenges by building and retaining talent in areas being transformed by AI, such as underwriting, pricing and claims assessment. Getting technology risk right is “a growth strategy and not just a defensive play”, he adds.

“Modernising legacy systems and building resilient data and cyber systems enables faster quotes for customers, sharper risk ratings and streamlined processing across underwriting and claims.

“What is important is that across this work humans remain at the helm, and the systems are continuously monitored as the technology evolves.”

The Insurance Banana Skins survey of general, life and composite insurance companies involved 698 leaders from 42 territories globally and 37 locally. The full report will be released in February.