10 years of Insurtech: from disruption to integration

  • Yannis Skiadas
  • 01 October 2025
Europe's insurtech companies started out ten years ago with big ambitions and lots of disruptive ideas, but for almost three years now they have been facing a harsh reality check that has unfolded in several phases.

Early narratives postulated that fintechs, including BigTech giants like Google, might reshape the future of insurance. However, in the face of onerous regulatory frameworks, this initial enthusiasm gave way to pragmatism. A new mantra came to the fore: ‘if you can't replace insurers, partner with them’.

Insurtech rebranded as digital distribution channels or MGAs (Managing General Agents), leveraging the balance sheets of traditional carriers or reinsurers. Concepts such as blockchain-based smart contracts, pay-as-you-go models, and parametric coverage were tested – but few delivered on their promises. When expected returns failed to materialize, venture capital funding dried up almost overnight in 2022. The pressure only increased as central banks raised interest rates sharply to curb inflation.

Capital cost: the real gamechanger

By early 2025, it was clear that the era of aggressive, VC-driven disruption was over. A tightening of monetary policy by central banks dramatically increased the cost of capital, shifting investor sentiment from high-risk growth stories to sustainable, performance-driven business models. The result? Funding flows slowed, ambitious roadmaps were shelved and only the most robust players were left in in contention.

Even within the insurance industry itself – the second-largest backer of Insurtech – interest is waning1. Rising rates have prompted a return to core competencies: risk underwriting, capital management, and balance sheet optimization. Overambitious growth plans, such as Swiss Re’s venture with iptiQ, have been reversed. Other setbacks – the stalled expansion at Wefox and Getsafe, for example, or the collapse of Kompass Group in Germany – underscore the volatility of the sector.

Structural complexity and regulatory headwinds

Wefox offers a valuable lesson. The company combined a digital platform with its own licensed carrier, selling proprietary policies alongside third-party products via brokers. Internal insurance operations introduced significant complexity and risk, however. While usability was high, many insurtech companies underestimated the operational demands of managing full-stack insurance models.

Established carriers benefit from decades of actuarial expertise and capital depth –advantages that new entrants could not easily replicate. Regulators, meanwhile, have acted as de facto gatekeepers. Their stringent oversight – predicated on policyholder protection – has curbed overly ambitious innovation and reinforced consumer caution. Trust remains the industry’s currency, and reputational setbacks have long-lasting consequences.

Strength trumps adaptability – and a potential niche play

Conventional wisdom suggests that the most adaptable players survive. In insurance, however, it appears that capital strength – not flexibility or innovation – remains the decisive factor for success. The business has changed little in centuries. Ask most insurance CEOs, and they’ll agree: the ability to price risk accurately and manage solvency will outlast any tech trend. Regulation reinforces this, often at the expense of bold experimentation.

Still, all is not lost. Insurtechs have undeniably played a key role in driving digital user experiences and operational efficiencies. If the grand revolution has failed to materialize, the next decade may bring success for niche players with deep domain expertise. Growth areas such as cybersecurity, pet insurance, and specialty asset coverage (e.g. antiques) present realistic and scalable opportunities.

Evolution, not revolution

The insurtech story is no longer one of sweeping disruption, but rather of targeted evolution. For industry leaders and financial institutions alike, the lesson is clear: innovation must be embedded in sound financial architecture. Sustainable transformation in insurance will depend not on hype, but on hard numbers, regulatory alignment, and strategic partnerships.

 

 

References
1 Global InsurTech Data Highlights: VC Investments, Deal Size & Funding

 


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