Insurance in Europe faces tech challenges

Europe remains a key player in the global insurance sector, with eight of the twenty largest insurers based on the continent. The region has long been known for its expertise, but the rapid rise of technology is reshaping the industry in areas like automation, data analysis, and customer interaction.

Technology investment grows rapidly

Ten years ago, only about 2.5% of insurance premiums were spent on technology, but this has now risen to around 4% and is growing quickly. As technology becomes more central to how insurance operates, the distinction between the insurance profession and technology is becoming less clear.

Sovereignty at risk without tech mastery

European insurers hold a strong position in the insurance sector, with the skills and major companies needed for transformation. However, as more value will depend on technology in the future, Europe must also master these tools. Failure to do so could lead to both a loss of competitiveness and a loss of control over critical operations.

Non-European tech suppliers are rising

The shift in technological control is not just about where data is stored or where companies are based, but about who controls the core technologies driving the insurance industry. Many European insurers, like Macif, are turning to non-European providers such as American firm Guidewire to upgrade their systems, creating long-term dependencies that are hard to reverse.

Global tech leaders dominate the market

The main suppliers of insurance software and tools are increasingly based in the U.S. and China. These platforms are central to how insurance operates, and as a result, control and expertise are shifting out of Europe. While some European insurers try to maintain their own capabilities, they often lack the resources or speed to compete with better-funded global players.

Artificial intelligence adds new pressure

Artificial intelligence is becoming even more central to insurance, requiring access to high-quality data and deep integration into business processes. Whoever controls the infrastructure that supports AI will have significant influence over the future of insurance. Europe still has the chance to maintain control, but only if it finds better ways for insurers and tech providers to work together.

A balanced approach to tech and independence

The make and buy model is increasingly relevant for European insurers. It involves keeping essential functions in-house while using external experts for agility. This is especially important for AI, which requires specialized skills that not all insurers can develop alone.

European tech startups struggle for funding

European startups in the insurance tech space face significant challenges in securing funding. In contrast, American and Asian competitors are raising much larger sums, such as 96 M$ for U.S. company Socotra and over 84 M$ for British firm Instanda. This financial gap makes it harder for European companies to compete globally.

Market fragmentation hinders growth

The European insurance market is also fragmented, making it difficult for companies to scale across different countries. For example, a French insurer looking to expand into Spain or Italy may face challenges similar to those of entering the U.S. market. This fragmentation increases the risk of strategic desertification, where key technologies and skills develop elsewhere, leaving Europe increasingly dependent on external solutions.