Singapore insurers more anxious than global peers, as risks related to AI, cybercrimes rise: report
Broader technology disruptions and macroeconomic uncertainties are adding to worries, says PwC study
[SINGAPORE] The misuse of generative artificial intelligence (AI) and cybercrime have emerged as among the biggest risks for insurers in Singapore, according to a recent global PwC report.
These concerns are further compounded by broader technology disruptions and macroeconomic uncertainties, driving increased anxiety levels among insurers based here.
The findings, which are part of the Singapore-specific results from PwC’s Insurance Banana Skins 2025 report, were produced in collaboration with the London-based think tank Centre for the Study of Financial Innovation.
The report assessed urgent risks facing the global insurance industry by gathering insights from industry professionals and observers worldwide.
“It’s not unexpected that insurers in Singapore reported higher anxiety than their global counterparts,” Ang Sock Sun, insurance leader at PwC Singapore, told The Business Times.
She explained that as a small country, Singapore faces “intense competition, a fierce battle for the same talent pool, and challenges such as an ageing population” – factors that may contribute to “structurally higher exposure and heightened risk sensitivity”.
The Banana Skins Index for Singapore rose to 3.44, compared with the global score of 3.22, reflecting a more cautious risk outlook among local respondents for 2025. Preparedness levels in managing these identified risks were also slightly lower at 3.21, below the global benchmark of 3.24.
In line with global trends, respondents in Singapore flagged cybercrime as the most critical risk. Cybercrime has consistently ranked among the top concerns for insurers here since 2017, noted PwC.
This comes amid the sector’s growing reliance on technology, third-party partnerships, and cloud ecosystems. Additionally, the sophistication of cybercriminals, especially those using generative AI to scale and speed up their attacks, has increased the overall threat level.
According to the report, generative AI combined with “ransomware-as-a-service” is lowering the barriers for cybercriminals, allowing them to inflict greater damage.
A deputy chief executive of a property and casualty insurer in Singapore was cited as saying: “Ransomware is the most prevalent cybercrime. It can disrupt insurers’ operations, damage reputations and cause significant financial losses.”
The report also highlighted a significant shift in how AI is perceived as a risk.
Though previously not among the top 10 local risks in 2023, AI is now in the sixth spot.
“Insurers perceive AI as both a threat multiplier and a transformative opportunity,” said Ang.
She pointed out that AI is already being integrated into various insurance functions such as customer experience, underwriting, claims, and risk management. However, as AI adoption accelerates, managing its associated risks becomes increasingly important.
“Effective AI risk management is increasingly essential to ensure successful and secure adoption,” she added.
This need for robust risk management is further highlighted by the survey’s findings, which show that respondents in the city-state are more sensitive to macroeconomic headwinds than their global counterparts.
This reflects Singapore’s status as a trade-dependent, globally connected financial hub, where shifts in tariffs, currency fluctuations, and capital flows directly impact operational confidence and strategic planning.
Ronnie Tan, group chief financial officer at Great Eastern, in his survey response warned about the “risk of stagflation as a result of tariff wars (and) divergent long-term interest rates between the US dollar and other currencies”.
Transformation is key
As the landscape evolves, insurers are adjusting their strategies to navigate these complexities. Ang noted that the investment environment remains highly dynamic, especially in Singapore’s open market.
“We do observe insurers continuously exploring new investment opportunities, while simultaneously managing risks and striving to meet customer expectations,” she said.
This approach is especially pertinent as life insurers introduce more investment and wealth products, requiring them to adapt their strategies to navigate persistent market volatility effectively.
Along with these macroeconomic challenges, human capital remains a critical concern in the Republic.
While it has fallen to fifth place in the ranking of top risks for 2025 – from the top spot in 2023 – it remains a significant issue, particularly given the ageing workforce and the competition for scarce talent in areas such as data science, engineering and actuarial roles.
Ang is seeing insurers transforming their operations to tackle challenges associated with an ageing workforce, particularly in legacy functions that are difficult to automate quickly. They are modernising these functions by integrating new technologies and leveraging AI to boost productivity.
“This approach not only addresses workforce shortages, but also allows insurers to reassign employees to higher-value tasks, ultimately driving growth within the sector,” she added.
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