Suzanne Smith (pictured), executive board member at the Australian Prudential Regulation Authority (APRA), addressed the Insurance Council of Australia (ICA) conference in 2025 – outlining the insurance sector’s responsibilities in an increasingly complex risk environment.
Speaking alongside ASIC commissioner Alan Kirkland, Smith highlighted the growing challenges facing insurers, including global instability, cyber threats, and climate change.
Despite these pressures, she noted that policyholders and communities continue to expect insurers to deliver on fundamental promises.
“Each claim filed tests how well those expectations are met,” Smith said, emphasising the importance of clear communication and consumer understanding to maintain trust in the insurance sector.
Smith described resilience as central to the insurance industry’s purpose, enabling communities to recover from adverse events and supporting economic stability.
She acknowledged that while some risk factors – such as climate and cost-of-living pressures – extend beyond the sector’s control, insurers are responsible for how they manage their businesses, address risks, and serve customers.
The industry has recently advanced disaster preparedness and begun implementing recommendations from the 2022 Flood Inquiry.
However, Smith cautioned that building resilience is a continuous process, not a single achievement. She identified several key elements:
Smith also referenced the Financial Accountability Regime (FAR), which took effect in March. Under FAR, insurers must designate individuals accountable for critical functions, including capital and risk management, underwriting, and product design.
Smith stressed that innovation is now essential for the insurance industry’s sustainability. She pointed to the potential of digital tools, artificial intelligence, and new business models to improve operational efficiency and customer experience.
“AI shows considerable potential in areas such as underwriting, claims processes, cybersecurity, fraud detection, and crisis prevention,” Smith said.
She encouraged insurers to approach innovation with transparency, particularly in explaining premium changes and pricing factors to customers. Smith noted that transparency can help build trust and support more informed decision-making by policyholders.
Leadership, according to Smith, is a key driver of resilience and effective risk management.
She referenced APRA’s recent Insurance Sector Risk Culture Survey, which found that strong leadership is characterised by boards and executives who drive change, encourage open discussion, and support staff in raising concerns. The survey also highlighted areas needing improvement, particularly in claims and technology functions.
Smith advised insurers to use these findings to better understand their organisations and address risks proactively, noting that prompt action can strengthen competitive positioning.
Smith outlined APRA’s efforts to balance regulatory requirements with efficiency, aiming to minimise unnecessary burdens on the industry.
Initiatives include reviewing reinsurance settings, streamlining data collection, and exploring data-sharing opportunities with other agencies.
APRA intends to consult with industry stakeholders to identify and address duplicative or complex requirements.
Smith concluded by reiterating that while the insurance sector cannot anticipate every emerging risk, it must consistently deliver on basic obligations and treat customers fairly.
She emphasised that maintaining public trust depends on insurers’ accountability and commitment to sound decision-making.
“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,” Smith said.
She closed by encouraging the sector to prepare for both risks and opportunities ahead, reinforcing the need for a proactive and collaborative approach to future challenges.
