Global reinsurers have identified climate change as the biggest risk they face.

The 2023 edition of the Reinsurance Banana Skins Survey, carried out by PwC and the Centre for the Study of Financial Innovation, reveals reinsurers’ views on the most urgent risks they face.

The survey was launched at the annual Rendez-Vous de Septembre in Monte Carlo this week.

The operational risk associated with cybercrime, ranked as the top risk across the wider insurance sector, came second on the list of urgent risks identified by reinsurers.

Respondents worried that a successful cyberattack could jeopardise business continuity and that the theft of sensitive data could have disastrous reputational consequences.

Third on the list is technology, with reinsurers showing concern about their ability to keep up with the pace of technological change.

Respondents had fears about the cost, as well as keeping up with the advancements and investment made by peers.

Concern about the difficulty of attracting and retaining talent makes the top five risks again, with respondents highlighting a particular worry about the acute challenge of finding people with the relevant technical and technological skills.

Regulation rounds off the top five risks, driven in part by regulators deploying expanding tool kits to enforce change.

Artificial intelligence enters the list for the first time, ranked sixth.

Matt Britten, partner, insurance, PwC Bermuda, said: “As the cost of natural catastrophe claims continues to rise, the reinsurance sector has once again, placed climate-change risk at the top of the list.

“This year, reinsurers have specifically highlighted growing concerns that — should loss costs continue to spiral upwards — some geographical areas and some types of risk could become uninsurable.

“And while cyber, technology and AI also feature heavily in the boardroom agenda for reinsurers, the challenge of attracting and retaining talent also remains a key concern.”

Britten added: “While reinsurers are the most optimistic of all of the insurance sub-sectors about their preparedness to handle the risks they face, the speed of change, illustrated by the significant rise in the list of deglobalisation, capital availability and credit risk, leave little room for complacency.”

Compared with their counterparts in other areas of the insurance market, reinsurers showed considerably lower than average concern about their sector’s ability to achieve cost reductions to remain competitive and its ability to manage change.

On the other hand, reinsurance was the only sector to place deglobalisation in its top ten risks, possibly reflecting the global nature of this segment of the insurance industry and its concern about protectionism.

The sector was also more concerned about availability of capital and credit risk, reflecting some of the challenges seen in the market over the last year and the recent implications of some alternative capital structures.

When asked how prepared they are to handle the risks they face, reinsurers are the most confident of all the segments in the insurance industry — 3.41 on a scale to five, compared with 3.2 for the industry as a whole (composite 3.38, life 3.14 and P&C/non-life 3.13).

This confidence reflects the relative sophistication of reinsurers’ risk management systems and scenario planning.