Cyber, technology and AI risks are “accelerating at a speed we haven’t seen before in the insurance industry”, according to PwC.

The consulting group’s Insurance Banana Skins report – identifying risks perceived as most urgent – finds cybercrime is the top threat among Australian respondents, and other digital dangers have jumped up the rankings.

PwC Australia insurance leader Antonie Jagga also warns of a “preparedness gap that didn’t exist two years ago”.

“We are seeing that Australian insurers are feeling less prepared to manage these challenges compared to their global peers,” he said.

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. 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.