Lockton has released a new report outlining risk and insurance factors shaping Australia’s technology sector in 2025.
The report highlighted a range of challenges, including regulatory shifts, artificial intelligence (AI) risks, cybersecurity threats, and economic uncertainty while also identifying opportunities for industry growth.
Government regulation of the tech sector is evolving, with both international and Australian policies influencing the risk landscape.
In the US, potential reforms to Section 230 of the Communications Decency Act could impact digital platforms’ liability for user-generated content. In Europe, the Digital Services Act is increasing regulatory oversight.
Domestically, the Australian government is focusing on online platform governance, AI regulation, and data protection. Proposed reforms include stricter content moderation requirements and a duty of care for digital platforms, while AI applications face potential new compliance measures.
These regulatory developments have insurance implications, particularly for directors and officers (D&O) liability policies. Lockton’s report advises companies to review coverage for regulatory defence costs, investigations, and penalties. Insurers are likely to scrutinise how businesses manage compliance risks, making robust governance structures essential.
The integration of AI continues to expand, with 35% of Australian tech leaders identifying AI-driven efficiencies as a primary business opportunity, according to the Tech Council of Australia. However, concerns remain over AI-generated decision-making, intellectual property risks, and regulatory compliance.
Lockton’s report highlighted that insurers are assessing AI-related exposures, with some introducing policy endorsements covering AI-specific risks. Businesses should ensure that cyber and professional indemnity (PI) policies address liabilities related to AI failures, algorithmic biases, and data privacy breaches. Establishing AI governance frameworks, including human oversight in AI-driven processes, can help mitigate risks and demonstrate responsible use to insurers.
Cybersecurity remains a critical concern as regulatory requirements and cyber threats evolve. Australian companies are under increased pressure to improve security measures and demonstrate cyber resilience.
Insurers are responding to these risks by refining coverage terms, including exclusions for cyber warfare and politically motivated cyber incidents.
Lockton advises businesses to assess whether existing cyber policies cover nation-state attacks, business interruption, and third-party liability for data breaches. Aligning IT liability (PI), cyber, and public and products liability (PPL) policies can help prevent coverage disputes in the event of an incident.
Additionally, businesses should strengthen third-party risk management practices, ensuring that vendors and service providers meet cybersecurity standards. Insurers are likely to consider supply chain vulnerabilities when underwriting cyber policies.
Global economic and political shifts are shaping the tech industry’s outlook for 2025. The return of Donald Trump to the White House has introduced regulatory uncertainty in the US, potentially affecting technology companies operating internationally. Meanwhile, Australia’s upcoming federal election may lead to policy changes impacting the local tech sector.
Economic conditions remain a key concern, with rising costs, limited research and development (R&D) investment, and skills shortages among the challenges facing Australian tech businesses. The Tech Council of Australia reported that 34% of industry leaders cite government policies as a barrier to meeting business targets.
Lockton’s report suggested that companies review their risk transfer strategies in response to economic uncertainty. Political risk insurance may be relevant for businesses operating across multiple jurisdictions, while D&O policies should provide protection against governance-related claims arising from financial instability or regulatory actions.
Australia’s tech sector is navigating a complex employment landscape, balancing workforce reductions, high wages, and skills shortages.
Large technology firms, including Amazon, Microsoft, and Salesforce, have implemented layoffs in early 2025, while salaries in the industry remain among the highest in the country.
Lockton’s report advises companies to review employment practices liability (EPL) policies, ensuring they cover potential claims related to redundancies, workplace mental health obligations, and employment rights disputes. Businesses should also consider corporate health insurance programs and key person insurance to address talent retention challenges.
Despite market uncertainties, investment activity remains strong, with private equity firms targeting cybersecurity and emerging tech subsectors. Some companies are exploring public listings, with the Australian Securities Exchange (ASX) looking to rebound after a slow period for IPOs.
Lockton’s report suggested businesses involved in mergers, acquisitions (M&A), or IPOs consider risk transfer strategies such as warranty and indemnity (W&I) insurance and public offering of securities insurance (POSI). These policies can protect against financial losses related to transaction disputes or regulatory issues.
Intellectual property (IP) protection is also becoming more critical, particularly as AI-driven innovation increases the risk of IP disputes. Companies should evaluate the need for standalone IP insurance to safeguard against infringement claims and legal challenges.
As Australia’s technology sector adapts to evolving risks and opportunities, businesses must take proactive steps to manage insurance and compliance challenges.
Lockton’s report underscored the importance of reviewing coverage for regulatory risks, cyber threats, workforce management, and M&A transactions.
