Insurance Risk Report: AI and Cybersecurity ‘Arms Race’ Poses Challenge

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This report is part of a monthly series analyzing corporate disclosures on key business risks, leveraging data from Factiva. Key insights include: Compared with the previous…

This report is part of a monthly series analyzing corporate disclosures on key business risks, leveraging data from Factiva. Key insights include:

Compared with the previous reports, the series now assesses four categories of risk: geopolitics & supply chain; tariffs; financial crime, including sanctions, terrorism financing, money laundering and fraud; and technological risk, including artificial intelligence and cybersecurity.

This report is on the insurance industry, which has not been covered in the previous reports.

Technology is the most-mentioned risk in insurance companies’ filings, amounting to over 2,300 mentions in the filings over the past year. Those mentions are divided almost equally between artificial intelligence and cybersecurity risk.

“We have lots of volatility, lots of uncertainty in terms of what’s going to happen around AI,” said Oliver Bäte, chief executive at German insurance company Allianz SE, in an earnings call from Aug. 6. When addressing AI risks, Bäte mentioned that many large language models are “still quite strongly hallucinating,” which he said is especially relevant for AI chatbots’ answers to healthcare questions. “We are really amazed how little regulators are taking a look at what the answers actually are and what they can create,” said Bäte.

Addressing the importance of tackling rogue AI agents, Bäte said that there have been “some of these control failures within Allianz and within the insurance environment.”

In response to a question asking if cyber risks are becoming uninsurable, Bäte said that cyber insurance will require real-time screening of the client’s exposure. “That’s easy for a small business. It’s very hard to do for a large global business,” he said.

Elmer Funke Kupper, chairman of the Board Risk Committee at Suncorp Group, an Australian insurance company, said during a Sept. 24 earnings call that AI “amplifies risks that we already have today, particularly in cybersecurity.” The board recognizes that “strong…

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