AI tops UK insurance risk index for 2025

Artificial intelligence (AI) is the most significant risk facing the insurance sector in 2025, according to the latest Global Forecast Report by Kennedys.

The report, published on 3 February 2025, highlighted how AI’s adoption is creating uncertainties around liability, regulation and insurance coverage.

It also revealed that the challenge for insurers is ensuring that traditional policies do not inadvertently cover AI-related risks, leading to unpriced exposures.

Tom Pelham, global head of cyber and data at Kennedys, said: “Being utterly nimble and embracing the change AI will bring is the only survival option.

“Sticking to traditional ways of working will make insurers obsolete and alienate them from an increasingly large sector of the population that will take the technological change in its stride.”

Other risks

The report, which is based on a survey of 170 Kennedys partners and industry insights, also showed that cyber attacks and social inflation pose more urgent challenges.  

In the UK, cyber threats and economic instability were flagged as key concerns in the short-term, while the effects of extreme weather were projected to manifest more substantially over a longer period.

“In a multi-polar and fast-moving world, the sector has to stay true to its core principles,” said John Bruce, senior partner at Kennedys.

“By working together with legal advisers and other experts, the insurance industry can develop solutions to identify new and emerging exposures, drive better outcomes and strengthen risk management strategies.”