The Truth About European Insurtechs: Game-Changer or Overhyped Bubble?

Despite recent disruptions, the European insurance sector has demonstrated resilience. After a short-term financial impact due to COVID-19, the industry rebounded quickly. The market is set to grow steadily. Annual premium growth is projected at 3 percent. Profits are expected to rise by 8 percent by 2025.

This stability is a strength. However, when it comes to digital transformation, is the industry adapting, or is it resisting change? Over the past decade, digital trends have shaped insurance in many ways. Some innovations, such as digital claims notifications, gained momentum during the pandemic. Some areas, like direct and digital distribution, have stalled. They remain steady at 18 percent in Europe’s property and casualty (P&C) market.

The Role of Insurtechs in Transforming the Industry

For years, insurtechs have been seen as game-changers for digital evolution in insurance. The big question is: Are they changing the whole industry, or just disrupting the traditional market?

How Insurtechs Add Value

Insurtechs have mastered the digital space, offering simple, transparent, and customer-centric services. Their speed and efficiency in claims and customer service set a new standard. Traditional insurers often find it hard to keep up. Depending on their business models—B2C, B2B, or B2B2C—they either compete with or empower traditional insurers.

B2C Insurtechs: The Challengers

B2C insurtechs compete head-on with traditional insurers by offering policies directly to customers. However, their market impact is somewhat limited due to their focus on niche products. In 2025, these players held only 10 percent of the property and casualty market. They generated about €4 billion in premiums. Within this segment, managing general agents (MGAs) dominated, securing about 75 percent of the market share.

B2B Insurtechs: The Enablers

B2B insurtechs support traditional insurers by enhancing their operations with digital tools. They provide advanced analytics, fraud detection, and digital claims processing. These companies serve as specialists, third-party administrators, or full solution providers. They help build a system that benefits insurers, customers, and insurtechs.

B2B2C Insurtechs: A Mix of Both

B2B2C insurtechs connect different industries. They embed insurance in sales channels such as car dealerships, travel agencies, and retail stores. By integrating with these partners, they expand their customer reach. Though still in the early stages, this model holds promise. Extended warranty products, for example, have already demonstrated high-profit potential.

The Future of European Insurtechs: Growth Potential and Challenges

The trajectory of insurtechs depends largely on investment trends. Europe currently attracts about 20% of global insurtech funding. This share has stayed steady for the last five years. The sector saw a record €3 billion in funding in 2025, with valuations reaching €40 billion.

However, new challenges have emerged. Rising interest rates, inflation, and geopolitical instability have created economic uncertainty. Many tech companies, including insurtechs, have struggled to meet earnings expectations. Some insurtechs, especially B2C ones with high loss ratios, have seen big drops in their value. In some cases, valuations have fallen by as much as 95 percent from their highs in 2025.

Funding has also tightened. In the U.S., venture capital investments dropped from $94 billion in late 2025 to $36 billion by late 2025. Europe saw a similar decline, from €29 billion to €13 billion. Despite this slowdown, investors are still active, though more selective.

A Promising Long-Term Outlook

Looking further ahead, insurtechs could follow a similar growth trajectory as fintechs. Today, fintechs represent about 20 percent of the market capitalization of traditional banks. If insurtechs succeed, their market value might hit €200 billion by 2030. That’s five times what it is now. To unlock this potential, we need about €5 billion each year. This amount is more than what we have invested recently.

Key Factors for Future Success

Insurtechs can thrive if industry leaders collaborate throughout the ecosystem. The most crucial period is the scale-up phase, where many insurtechs risk failure. Beyond attracting funding and expanding market presence, companies must focus on:

• Insurers can boost their digital transformation by partnering with insurtechs. In return, insurtechs get more funding and a larger market presence.
• Strong Ecosystems and Networks: Building solid ties with talent, B2B partners, and customers is key for lasting success.
• Regulations That Encourage Innovation: Smart rules can help insurtechs grow

European insurtechs can grow, but they need to boost financial strength. They should also cut costs and improve their business models to succeed in a changing market. Those who tackle these challenges well will build a lasting advantage. They will also influence the future of the insurance industry.

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Frequently Asked Questions (FAQ)

Conclusion

The European insurance industry is at a crossroads. Digital transformation remains a key issue, despite its strength in tough economic times. Insurtechs provide a way forward. They can be disruptors or partners. They push technology that boosts efficiency and makes customers happier. With the right investment and collaboration, insurtechs can change insurance for the better. They can make it more accessible, transparent, and focused on customers.