Our Insurance Banana Skins 2025 report reveals the top three risks identified by New Zealand insurers, highlighting the need for strategic adaptability, operational resilience and innovative approaches to risk management. Local findings largely mirror global trends:
- Artificial intelligence (AI) jumped from #10 in 2023 to the top risk in New Zealand for 2025 (#2 globally)
- Cyber crime held steady at #2 locally (#1 globally)
- Climate change rose from #4 to #3 (#5 globally) - underscoring its importance for the local market
We explore the insights behind the trends.
New Zealand
|
Global |
||
2025 |
2023 |
2025 |
|
| 1 | Artificial Intelligence (AI) | #10 (up 9) | Cyber crime |
| 2 | Cyber crime | #2 (no change) | Artificial Intelligence (AI) |
| 3 | Climate change | #4 (up 1) | Technology |
| 4 | Suitability of regulation | - | Macro-economy |
| 5 | Regulatory change | #1 (down 4) | Climate change |
| 6 | Reputation | #3 (down 3) | Regulatory change |
| 7 | Technology | #5 (down 2) | Human talent |
| 8 | Social change modelling | - | Change management |
| 9 | Macro-economy | #9 (no change) | Political risk |
| 10 | Human talent | #8 (down 2) | Suitability of regulation |
AI: Unlocking value through responsible adoption
For New Zealand insurers, Artificial Intelligence (AI) tops the Banana Skins list.
The misuse or poor governance of Generative AI, and the rise of AI-driven fraud are significant risks. However, the impact of AI extends much further, presenting broader challenges, including how the industry approaches regulation, develops human talent, stays relevant to evolving customer expectations and ensures AI models are fit for purpose.
Early adoption and upskilling
For New Zealand insurers, legacy systems and fragmented data often lead to stalled pilots, inconsistent return on investment, and rising operational risk when using AI. While it may still be too early to see significant transformation in business processes, ensuring staff are upskilled on AI capabilities is a foundational element of unlocking benefits in the future. Generative AI is a highly accessible technology, making people-focused change even more critical to realising value in these early stages of the AI revolution.
Impact on governance
AI can also amplify exposure to risk if governance is weak or not considered enough, introducing vulnerabilities such as privacy breaches, biased outputs, hallucinations in customer‑facing tools and interactions, and sophisticated forms of AI‑enabled fraud. Robust governance is vital to mitigate these risks.
One of the most common emerging threats is shadow AI - where employees use unapproved tools in the absence of safe, supported alternatives. Without providing your people with responsible AI solutions, they are likely to adopt them independently, increasing the risk of unintended consequences.
Strategic implications
AI has the potential to reshape business models, customer expectations, and workforce dynamics. Decisions made today, such as offshoring or technology platform choices, can impact the future agility of your business. For example, while offshoring is an increasingly common approach among New Zealand insurers now, AI may shift the economics, opening up new AI-anchored onshore opportunities that were previously unviable.
Where to focus now
- Equip your people and focus your delivery. Invest in targeted training for leaders and teams to build AI literacy and confidence. Focus on business‑specific problems where AI can deliver measurable impact within 6–12 months and develop a proof of concept to demonstrate value.
- Operationalise governance. Establish a clear AI governance and operating model with defined accountabilities. Implement a policy that articulates risk appetite, sets guardrails, and communicates minimum control standards, aligned to the Conduct of Financial Institutions (CoFI) regime and the Privacy Act (2020).
- Align AI with your long-term strategy. Assess how today’s decisions, such as offshoring or technology investments, may shape or constrain your future business model. As AI capabilities continue to evolve, consider whether current choices support long-term agility, scalability, and competitive advantage.
The global insurance industry is not well prepared for fast-moving, amorphous risks such as AI or non-linear climate events. It is a data driven industry; it rarely looks to the tea leaves — instead it waits until it sees the clear trend in the tea leaves to act. This asset of prudent conservatism risks becoming a liability.
How we can help
Our AI specialists offer expertise and experience from strategy and pilots, to upskilling and responsible AI governance.
Get in touch to discuss how we can help you with targeted executive education sessions, strategy and responsible AI co-development, training and upskilling for your leaders and your workforce, assistance with building custom assistants, and fully automated generative AI solutions.
Cyber crime: Strengthening defences in a digital world
Cyber crime remains the second-ranked banana skin for New Zealand insurers in 2025.
This reflects concern within the industry about the pace of technological change, particularly with AI, which is making cyber threats increasingly difficult to anticipate or prevent. Insurers are seen as high-value targets due to the sensitive data they hold, with breaches carrying significant financial and reputational consequences. Strong planning, fast response capabilities, and tight oversight of third-party vendors and cloud-based systems are key.
Data is an attractive target
Insurers hold large volumes of sensitive data and play a central role in maintaining public trust. Attackers are getting faster and more convincing, with AI supercharging credential-stuffing, phishing and deep-fake social engineering.
Fraud is increasing throughout the value chain
At the same time, fraud is evolving and becoming more sophisticated across the value chain. Risks include redirected claims payments, commission scams and “policy-aware” ransom demands - where criminals use stolen policy details to set extortion levels.
Clarity of cover
The complexity of some cyber insurance policies can expose both insurers and their clients to unnecessary risk. Ambiguities – often compounded by lengthy questionnaires and complex fine print – can create confusion about what is (and is not) recoverable. For insurers, the risk can be heightened by gaps in the client’s control environment.
The fact that most insurers are increasing reliance on third-party vendors, cloud-based systems, and real-time data exchange as they modernise their technology will place a significant focus on cybersecurity and operational resilience – with a possible resultant opportunity cost in underinvestment in customer capabilities.
Where to focus now
- Anchor on resilience. Identify the systems, data and processes that would put you beyond your risk appetite if disrupted (or publicly leaked). Set clear recovery times and data loss objectives, validate your processes through exercises, and document how you operate through a disruption - not just how you recover.
- Close fraud loopholes. Incorporate payee validation as standard before any changes to claims bank accounts. Strengthen adviser onboarding and enhance ongoing monitoring to help prevent fraudulent policies and commission abuse.
- Redesign the experience. Strengthen your partnership with clients by proactively communicating and clearly outlining the exact content of the policy coverage in the context of evolving risks. By coaching clients on baseline controls and incident readiness, insurers not only reduce the likelihood and impact of claims, but build trust and loyalty to create more resilient relationships over time.
Cyber threats are definitely a ‘When’, not an ‘If’, for insurers, and we’re battling globally active 24x7 threats.
How we can help
Our cyber experts will help you understand cyber risk in your business context, providing you with insightful advice, innovative solutions, and data-based assurance to manage these risks and unlock value.
Connect with the team to discuss how we can help you plan for and respond to cyber attacks, provide managed cyber defence to protect your organisation against 24-hour threats, rationalise your tech stack to reduce cost and complexity, and provide ongoing support to manage your cyber risk through our AI-enabled platform that consolidates live threat intelligence with your risk, control, and investment data to help you make stronger decisions.
Climate: Building a sustainable and resilient sector
Climate change has moved up New Zealand’s Banana Skins rankings – rising from #4 in 2023 to #3 in 2025, and higher than the global ranking (#5).
This is likely to be driven by the country’s high exposure and vulnerability to natural hazards, and sensitivity to flooding and erosion as result of high impact weather events.
The house insurance price index has risen 916% since 2000, based on Stats NZ CPI 2025 data – the largest price rise of any item tracked in the consumer price index. This underscores the urgency of reassessing risk models and developing adaptive strategies amid mounting claims payouts.
Insurance affordability
As claims continue to rise and risk-based pricing becomes more common, there is growing concern that some areas are becoming not only unaffordable but increasingly impossible to insure, leading to coverage gaps.
Data for resilience
The industry holds valuable data and modelling capabilities that help assess, manage and price risk. By actively sharing their insights and working with key stakeholders, they can support more coordinated decisions across government, councils, and communities, helping to inform smarter planning and climate adaptation.
The recently published “National Adaptation Framework” (released in October 2025), is a step in providing guidance on how government, local councils, the private sector, and communities can collaborate to manage and adapt to climate-related risks.
Climate related disclosures
In an environment that continues to evolve, some regulatory requirements in New Zealand have recently been postponed or scaled down – but the climate risk is still there.
Disclosure requirements are an opportunity for the sector to quantify climate impacts, using their rich data, while encouraging more informed decision making – particularly in relation to value chain Scope 3 emissions reduction and where funds are invested.
“Annual climate-related damage is regular, expensive, and random. The current approach needs to be reviewed by Government and the industry to create a more sustainable, long-term solution.”
Where to focus now
- Risk integration & strategy: Continue to consider how physical risks (flood, cyclone) and transition risks to a lower carbon economy can be embedded in underwriting, pricing, product design, reinsurance, and investments.
- Prevention and collaboration: Invest in driving adoption of existing risk prevention solutions - such as properly elevating homes in flood areas. By collaborating with a variety of stakeholders to shape a coordinated approach to risk prevention, insurers can help chart a viable path to a more resilient future for the industry and society at large.
- Get “disclosures-ready” ... and take action to reduce emissions: Use the additional time to:
- Strengthen climate reporting capabilities by developing robust methodologies to improve forecasting and better assess the anticipated impacts of climate change;
- Establish more robust processes and controls to calculate Scope 3 emissions; and
- Outline clear plans for managing Scope 3 financed emissions and align investment strategies with climate objectives.
Risk-based pricing protects our profits, but if areas are uninsurable society will hold insurance companies accountable, not the state.
How we can help
Our Climate, Sustainability and Nature experts can support your organisation to drive value and efficiency at any stage of your sustainability journey.
Speak to one of our team who can deliver workshops to shape your sustainability, decarbonisation, and transition strategies; advise on sustainable finance and reporting; and provide assurance over your Scope 3 emissions. We also support you with scenario analysis to assess climate-related risks and opportunities, and help quantify the anticipated impacts of climate change on your organisation.
Global Insurance Banana Skins report 2025
Now in its 10th edition, the report draws on the perspectives of 698 practitioners and close observers of the industry across 42 territories and is produced in conjunction with the Centre for the Study of Financial Innovation (CSFI).
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