APRA Executive Board Member Suzanne Smith - Remarks to the ICA conference 2025

From risk to resilience: Futureproofing Australia’s insurance sector 

Introduction

Good morning and thank you for the invitation. It's a pleasure to return to the ICA conference for my third address.

I’m pleased to be here with my ASIC colleague, Commissioner Alan Kirkland.

The theme of futureproofing Australia in a risky world is highly relevant. Who better to manage the challenges of a risky and ever-evolving world than those who live and breathe risk every day? Insurers.

Risks are on the rise, with businesses facing geopolitical instability, cyber threats and a changing climate. Despite these evolving challenges, communities continue to expect that insurers get the basics right. Each claim filed tests how well those expectations are met. Enhancing consumer understanding of policies is vital, or diminishing trust could undermine the social licence of insurers.  

So, it is important that you take the time to ask yourself what is within your control to ensure that those expectations are met, and how you will hold yourself and others accountable to deliver on those promises?  

The conference themes of resilience, innovation and leadership are a great starting point to challenge yourselves on how you do that. Today, I will have a look at each of these three industry pillars.

Resilience: get the basics right, every day  

Let’s start with resilience. It’s the heartbeat of insurance – helping communities recover from disastrous events, giving investors confidence and boosting communities’ financial and social resilience.  

We acknowledge there are many factors that sit outside of the control of insurers alone. Climate change, the need for de-risking, mitigation and addressing cost-of-living pressures rely on a suite of actors including government, the community and other businesses to effect change.

However, you are in control when it comes to how you run your business, manage your risks, treat your customers, innovate your products and, ultimately, build trust and resilience in your industry.  In the past year, the industry has taken positive steps to strengthen resilience through better disaster planning, and commencing work on implementing commitments made in the Industry Action Plan in response to the 2022 Flood Inquiry.

While this work is strengthening the core of your business, note resilience isn’t a ”one and done” exercise, it’s a constant practice of adaptation.  

And true resilience rests on solid fundamentals, including, but not limited to:  

• a strong capital base that’s supported by prudent underwriting and effective risk management;
• operational resilience, including third-party oversight and planning for major risk events;
• robust and sound claims management capabilities, processes and controls; and  
• cyber security that keeps pace with evolving threats.

Getting the basics right is non-negotiable. APRA will continue to push you in these areas, but we hope to see insurers proactively holding themselves accountable to ensure their basics are strong.

The implementation of the Financial Accountability Regime in March this year has further increased accountability. Under FAR, insurers must have appointed accountable persons to take responsibility for key insurance functions in areas including capital management, risk management, underwriting, reinsurance and product design.  

Embracing innovation  

Let’s look at innovation: It isn’t optional – it’s essential. It’s how we futureproof insurance and support a thriving, competitive industry. By embracing effective design and implementation, innovation can improve customer engagement at various touchpoints, while also delivering cost efficiencies that can assist with affordability pressures. Innovations can also make it easier to identify and respond to risks.  

The risks we face today – cyber, climate, geopolitical – demand smarter and faster responses. Investment in digital capabilities, AI, and new business strategies will open new opportunities and enhance industry resilience.

AI shows considerable potential in areas such as underwriting, claims processes, cybersecurity, fraud detection, and crisis prevention. It can bring efficiency to your business and in turn deliver greater value to your customers. However, it’s imperative that you fully understand the risks, as well as the opportunities.  

While I encourage you to embrace innovation, I have one reminder: solve for the customer – and do this transparently.  What more can you do to help your customer understand why their premium has changed, the factors that contribute to an increasing price and importantly what role, if any they can play to bring the cost down? Transparency builds trust – and trust builds your business.

Leadership: step up – together  

That brings us to leadership. In a risky world, leadership means courage and clarity.  

Good leadership creates resilience. It shapes a strong risk culture.  

APRA’s latest “Insurance Sector Risk Culture Survey” shows what "good" practice looks like:  

• Boards that drive real change, executives who challenge constructively and staff who feel safe to speak up.
• Clear roles and accountability, including proper recognition and support for risk raisers.
• And a risk culture that’s embraced across the organisation. From leaders to middle managers, and from back office to frontline teams.  

This survey also unearthed pain points for claims and technology staff – areas that need urgent uplift.  

The insights from this survey will help you to understand your business and step ahead of your risks. Insurers who address these issues promptly can significantly enhance their competitive position.  

APRA: getting the balance right  

Accountability is not just something APRA expects from the entities we regulate. It is something we constantly challenge ourselves on. We publicly outline our strategic priorities each year in our Corporate Plan – most recently in August.

In addition to strengthening our focus on aspects like cyber and operational resilience, the latest plan sharpens APRA’s focus on “getting the balance right”. This means promoting system safety and stability in a balanced and efficient way.

APRA is progressing a range of initiatives to minimise regulatory burden for the industry to support productivity. While we have a prudential framework in place that is designed to minimise unnecessary burden, we will further promote efficiency, transparency, and proportional regulation where it’s safe to do so. For the general insurance sector, areas of focus include:

• the adjustments of reinsurance settings to promote cost-effective access;
• the ongoing review of data collections; and
• the identification of data sharing opportunities with other government agencies to minimise complexity and duplication.  

Over the coming months, APRA will engage with industry stakeholders to gather feedback on how to strike the optimal regulatory balance.  

Sharing examples of duplicative or overly complex requirements will help us improve. I look forward to your insights.

Into the future

Futureproofing fundamentally means anticipating challenges and identifying strategies to mitigate shocks. While APRA does not expect the industry to foresee every possible emerging risk, public expectations for fair treatment remain constant. And, regardless of external difficulties, the requirement that insurers get the basics right will not abate.  

Moreover, maintaining a social licence to operate relies on insurers’ accountability in making decisions that foster trust within the sector.

If you master the basics, embrace innovation, and lead with a strong risk culture, you won’t just weather the next storm - you’ll strengthen trust in an industry that is essential to the community and our economy.

Yes, the future is risky. But it’s also full of opportunity. Let’s make sure Australia is prepared.

Thank you. I’m looking forward to the conversation.