Insurers ‘increasing spend but still unprepared’ for third party risks

Almost nine in 10 UK insurers and brokers have suffered negative impacts from third party-related risks, according to new research published by data and analytics firm Dun and Bradstreet.

The report, published in October 2025, found that 85% of firms experienced issues such as security breaches, financial losses, supply chain disruption and reputational damage due to weaknesses in managing external risks.

At the same time, confidence in internal data remains low. Nearly 70% of respondents said they were unable to effectively forecast future trends, while more than 80% could not assess non-financial risks.

Only 29% felt equipped to make informed business decisions based on the data they currently hold.

Zulf Raja, head of insurance at Dun and Bradstreet, said the findings showed insurers’ efforts to improve risk management were being undermined by data shortcomings.

He felt that insurers needed to prioritise improving their data foundations to support more accurate decision-making and maintain resilience in an increasingly complex risk environment.

“Insurers are rightly increasing their investment in risk management. Many are still trying to tackle tomorrow’s threats with yesterday’s tools,” he said.

“Reliance on poor-quality data and manual processes not only leaves firms exposed but actively undermines the value of their investments.”

Disconnect between investment and preparedness

Meanwhile, despite ramping up spending, many insurers still reported feeling underprepared for the very risks they are investing in.

According to the report, 71% of firms increased budgets for environmental, social and governance (ESG) initiatives, 74% for cyber security, 73% for legal and compliance and 64% for fraud prevention in the past 18 months.

However, a significant proportion of respondents still felt ill-equipped to manage these challenges – 34% for ESG, 28% for cyber security, 25% for legal and compliance and 22% for fraud.

Dun and Bradstreet said this disconnect between investment and preparedness indicated that insurers were struggling to translate budget increases into effective risk mitigation. One of the top barriers cited was the difficulty in measuring or quantifying risk, reported by 32% of firms.

Raja concluded that insurers must act decisively to strengthen their data quality and modernise risk management processes “to safeguard their operations, reputation and long-term resilience”.

The Dun and Bradstreet Third Party Risk Report is based on a survey of 503 senior UK financial services professionals – including 95 from insurance firms. It was conducted between 6 and 12 August 2025.