Insurance industry chief Mary Francis has warned delegates at the Association of Insurance and Risk Managers (AIRMIC) conference that the biggest risks they faced could come from botched communications.

The Association of British Insurers' director general said getting messages right was vital. Mistakes would lead to backlashes from any number of groups.

"Today's risks are more from the threat of government and regulators, from technology and the breakdown of technology and knowledge, and from the fact that customers are ever more knowledgeable," she said.

The insurance industry itself was no exception. It was no coincidence, Francis said, that the government had imposed insurance premium tax on the industry just after the pensions mis-selling scandal broke.

"Human emotions are more important today to business than the physical risks," Francis said, citing an example from her days in government when Michael Heseltine announced pit closures on sound economic reasons but without considering the massive emotional backlash from the public over the impact on local communities.

"People realised then that it wasn't only about money and the economy but it was about people and emotions and communications," she said.

Francis rubbished those who suggested insurers had nothing to offer companies facing modern risks. "There are those who say we should stick to our knitting and leave the new risks to the financial engineers," she said. "But I disagree. I think insurers bring vital skills to help with predicting and pruning risks. Companies will need an integrated approach with insurers as part of the solution but not all of the solution."

Insurers would need three characteristics, Francis said. They would need to be innovative, asking about risks to reputations, how good were a company's relationships with government and regulators and what risks they faced from the equal opportunities and environmental lobbies. "It's not just underwriting skills but political science and economics," she said.

Insurers would have to more on prevention and not just prediction, Francis insisted. She cited examples of work on rehabilitation and on improving flood defences as examples where insurers had been active.

And she said the industry would have to improve its service standards and be proactive in selling its services.

"Too often in the past insurance has been passively bought rather than actively sold," she said.

And she said the insurance industry had to work hard as it was operating in "a climate of suspicion and attack".