InsurTech eyes rebound despite Europe’s subdued deal market

Cynthia Ezekwe

Despite a slowdown in deal activity in the European InsurTech market in 2023, industry experts are optimistic about a rebound in 2024. The insurance industry has been slow to embrace digitisation, but the need for innovation is becoming increasingly apparent. Performance trends show that InsurTech companies are well-positioned to take advantage of this growing demand for technology-enabled solutions, offering innovative products and services that meet the needs of today’s customers. 

According to recent research by InsurTech Analyst, deal activity in the European InsurTech market dropped significantly in 2023, with a decline in both the number and value of deals. However, the outlook for 2024 is positive, with industry experts predicting a surge in growth as the insurance industry continues to evolve and embrace digital transformation. 

Speaking on the  decline recorded by the industry in 2023 and the predicted growth, Benjamin Deplus, principal in the venture team at Breega, a European venture capital fund designed to finance startups in the digital economy, said, “In 2023, the InsurTech sector matured significantly. numerous companies within the industry secured substantial funding to support their growth initiatives at cost. However, despite the influx of financial support, there was a decline in both the number of deals and overall investment due to challenges stemming from inadequately automated technologies.’’

Deplus forcested a surge in InsurTech deals and investment in 2024, identifying a range of growth opportunities for the sector. According to him, as the insurance industry looks to address emerging risks such as cyber security and embrace the potential of AI, InsurTech companies will be well-positioned to offer innovative solutions.

Marat Nevretdinov, CEO of HDI Embedded, an InsurTech company specialising in embedded insurance, believes that the sector’s decline in deal activity may be due to its expansion beyond Europe. He pointed out that as InsurTech companies look to Asia and Latin America (LatAm), they are likely to see greater exposure and investment in these regions. This could lead to a shift in the geographic landscape of the InsurTech market, with new hubs emerging outside of Europe.

“In 2024, we could see an increase in a number of new partnerships in regions other than Europe, with more significant growth in Asia, LatAm and the USA. Take the adoption of embedded insurance, for example. While each case is different, the growth of embedded insurance in LatAm and Asia is because underinsured populations present a market opportunity (it’s relatively easier to introduce insurance solutions to populations without it),’’ he said.

Nevretdinov noted that last year’s regulatory changes, combined with the growing digital savviness of customers, had an impact on both the number of partnerships formed between InsurTechs and traditional insurers, as well as on investor sentiment.

Quentin Colmant, CEO of Qover, Belgium-based technology company that designs, builds, and distributes digital insurance solutions, noted that the success of the European InsurTech deals market is serving as a model for startups across the rest of the continent.

“The UK’s prominence in InsurTech significantly influences Europe’s startup scene. Serving as a model for innovation and resilience, the UK’s leadership sets an example for startups across the continent and contributes to the overall dynamism of the ecosystem,’’ Colmant said.