5 Key Insurance Industry Trends in EMEA Regions

By Arthur Bessieres and Hissan Usmani Published on Jan. 12, 2023

Insurance industry trends over the past year have been significant, especially across Europe, the Middle East, and Africa. 2022 was a unique year, marked by uncertainty and scarcity, following a record-breaking and prolific 2021, where global insurtech investments reached new heights. Plug and Play’s position between corporates and startups enables us to have a comprehensive understanding of these trends. We've also sought input from other venture capitalists and industry experts to provide a well-rounded perspective on the events of the past year and what we can expect in the near future.

1 - Moving toward an insurance ecosystem

As foreseen in our 2021 insurance industry trends article, insurance trends 2022 can be characterized by a significant increase in ecosystem adoption. The emergence of new online insurance services has led to the development of more diverse and multifaceted offerings allowing users to meet a range of needs through a single, integrated experience. This shift has enabled innovative insurers to develop disruptive distribution and engagement models, creating insurance ecosystems that enhance personalization and customer experience.

Three major trends have emerged in the insurance ecosystem market:

  • The continued evolution of technology enablers has allowed incumbent insurers to easily access a variety of new internal and external capabilities in a seamless manner. Socotra, a startup that raised a $50m funding round in 2022, offers an app marketplace that gives customers access to 30 app publishers, allowing them to eliminate lengthy and rigid integration projects and add new features and services quickly
  • The rise of ecosystems focused on specific lines of insurance, such as health. Daccado, an insurtech that specializes in supporting the digital transformation of insurers through health risk quantification and digital health engagement platforms, exemplifies this trend. The company partnered with Digital Insurance Group, aka DIG, this year to offer lifestyle-based products to life insurance customers, enriching the insurer's offerings and providing tangible benefits to its customers
  • The emergence of ecosystems targeted at a specific population segment that shares common characteristics, such as people over the age of 50. Restless, a startup that recently secured €6m for its platform catering to this age group, offers a digital community, advocate, and advice platform for individuals over the age of 50 who are seeking to make changes in their lives, such as exploring new hobbies, trying new jobs, and meeting new people

Overall, the adoption of ecosystems in the insurance industry has allowed the creation of more diverse and personalized offerings, and has enabled insurers to create new distribution and engagement models. These trends will likely continue to shape the industry in the coming years.

2 - Innovation insurance products

With the changing needs of customers and businesses, we saw new products from insurance companies emerge to better offer tailored solutions to customers. Based on our corporate partners’ areas of interest and new product offerings, we identified three product areas that saw the most growth in 2022:

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Cyber insurance

As the reliance on technology and the internet in both personal and professional settings increases, the risk of cyber-attacks and data breaches has also risen. Cyber insurance helps cover the costs associated with these events, including the cost of recovering from a data breach, legal fees, and compensation for customers affected by the breach. The demand was also backed by venture capital when Eye Security, a Dutch cyber-insurance startup, raised €17m. Another example is Helvengo, which provides insurance solutions tailored to SMEs in the DACH region, raising €4m in a seed financing round to bring technological advancement into SME insurance with a major focus on cyber insurance.

Pet insurance

This year, we have witnessed exponential growth in the interest for pet insurance both from our partner requests and from the number of new insurtechs and funding focused on this segment. Some key offerings we saw bundled in pet insurance coverage were online consultation with vets, full coverage of the cost of medical treatment for illnesses and injuries, and routine care such as vaccinations and preventative care. Pet wellness was also seen as an upcoming trend where pet owners can use services for pet well-being all using one platform. One pet insurtech startup providing a transparent, end-to-end digital service for pet owners and veterinary clinics is Napo.

Parametric and weather insurance

This became a trend in 2022 as more insurance companies wanted to offer weather protection products to their customers, mainly driven by climate change and unforeseen natural hazards. This type of insurance can provide protection for businesses and individuals who are vulnerable to weather-related risks. Parametric insurance also saw a technological advancement with machine learning models and the use of real-time weather data. Startups like Climatica, are offering parametric insurance products based on machine learning solutions and real-time weather monitoring to offer fast, simple, digital weather insurance to insurance customers. Another example is the SaaS platform, Mitigrate, which enables banks and insurance companies to understand the impact of climate change and help to reduce the physical climate risk to their assets and properties.

Due to the increase in new products on the market, we've observed a corresponding increase in demand for insurance product builders. Product builders are platforms or software that allow insurers to design, build, and launch new insurance products quickly and efficiently. Tigerlab, which is an insurtech offering an end-to-end insurance platform product builder working with top insurance companies, has seen growth in demand from insurers in the past year. They even were amongst the few insurtech startups selected for Plug and Play Batch 9, all based on votes from the insurance partners. Even insurtech startups and MGAs, or managing general agents, collaborated with product builders to build fast and sophisticated products and then add their marketing magic. Dalma, a pet insurance startup, collaborated with Seyna, a french product builder to roll out pet insurance products with dynamic pricing giving Dalma a competitive advantage amongst its peers.

Check out some of our related corporate partners in the space such asGenerali,UnipolSai, andChedid Capital.

3 - Predictive modeling in insurance for prevention

Preventive analytics is a promising approach for the insurance industry, as it allows companies to identify and predict potential risks before they occur. By using data analysis techniques, insurance companies can take proactive measures to prevent losses and improve risk management. Many European incumbents have recently teamed up with insurtech firms to develop predictive models that help minimize policyholder risk exposure. These models are transforming the industry by shifting it away from a reactive "fix and repair" model to a proactive "predict and prevent" approach.

Insurtech startups are competing to offer the best solutions for the shift towards a more preventive approach to insurance. By providing policyholders with services that help avid claims from happening and proactively address potential issues, insurers can improve the customer experience and reduce costs. Some examples are:

  • Insurance companies can leverage data analytics to anticipate the likelihood of certain types of claims, using sources such as weather data and policyholder health information. Startups like Thryve, Binah.ai or HealthCaters utilize passive or active health data tracking to assess emerging risks and provide insurance companies with insights for risk assessment. Medicus AI, Holly Health or Second Nature offer solutions to help incumbents by offering remediation actions. In the P&C sector, startups like Enzo use data-driven techniques to prevent household damage and improve home safety proactively. Another example is Gocleer which utilizes data analysis to empower drivers to improve their behaviors and reduce the risk of accidents

  • Insurance companies can use data on past claims and policyholder behavior to identify patterns or deviations that may indicate fraudulent activity, and take action to prevent it from occurring. There are startups that use behavioral biometrics, such as V2verify and ForMotiv, which rely on proprietary datasets that are effective at predicting a user's "intent." By analyzing and understanding these behaviors, insurance companies can more effectively prevent fraud

4 - A financial literacy app with specific customer segmentation

Silver economy

The segment of the population where the economic activities and opportunities are related to the aging population (50+ years old). As people live longer, healthier lives and continue to work, travel, and participate in leisure activities, there is a growing market for products and services geared toward seniors. Insurance companies, with a growing part of the customer base falling into the category of the silver economy, benefit from exploring this market and offering specialized insurance products beyond health and life insurance. We also saw a rise in startups like Heimkapital and Wertfaktor, which assist the mainly silver economy population in partially selling their properties and living a financially stable life after their retirement.

financial literacy app

Generation Z (Gen Z)

Another customer segment which attracted interest from our insurance partners was “Generation Z,” or those born between the late 90s and earl 2010s. Gen Z, are a demographic group that grew up with technology and the internet and uses online platforms to research and purchase products and services. Insurance companies can target Gen Z customers by offering tailored insurance products and services. However, to effectively reach these customers, a focus on their financial literacy is the first step that needs to be taken.

From our projections, Gen Z would be a loyal customer to the brands they would associate themselves with until they feel valued and the brand can help them create financial well-being for themselves and has a strong purpose/impact. We saw fintechs primarily focusing on financial management and literacy for Generation Z customers, like the app Quirk, which offers smart budgeting features for the customers, while educating them on how to save their money in a better way. Customers can first take a "money personality" test to better understand which category of learning they fall into.

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Gender-focused segmentation

There's been a significant focus on financial literacy and education for women. Finmarie, a startup from Berlin, is working closely with companies and communities to foster financial education and the well-being of women. The company does this through its app where women can access financial knowledge and assistance for investments and money management.

5 - Acquisition as a driver of insurance innovation

In 2022, acquisition became a key driver of innovation in the insurance industry. There were several notable examples of this trend as traditional insurance companies turned to acquisitions to access new technologies, expertise, and markets. This trend was driven by three key factors: corporates acquiring insurtechs, insurtechs acquiring other insurtechs, and further development of corporate venture capital, or CVC, vehicles.

Some examples of traditional insurance companies acquiring insurtechs are:

  • Allianz's acquisition of Simplesurance, a German insurtech that provides extended warranty and insurance coverage for consumer electronics and other products.
  • Munich Re’s acquisition of Apinity, a startup that supplies API solutions for the insurance industry
  • Chedid Capital’s acquisition of BuyAnyInsurance.com, a leading online insurance platform in the UAE

These strategic transactions allowed the companies to access new technologies and expertise, and use them to enhance their operations and offerings.

Startups acquiring other startups is another example of acquisition driving innovation in the insurance industry. In 2022, the insurtech +Simple announced six acquisitions, including InnovAction, which specializes in insurance coverage for heavy trucks, and MG Denzer, which offers insurance for interpreters and hotel restaurants. Lemonade also performed the acquisition of the insurtech Metromile, whose intricate sensors and AI technology have been used to monitor billions of miles of driving and accurately assess risk, by cross-referencing data with claims. By integrating these models into its platform, Lemonade aims to make its car insurance offerings more competitive, precise, and fair.

This year, the insurance industry has also embraced even more the use of CVC to drive innovation. According to a report by Bain & Company, CVC-backed investments now make up over 20% of global venture capital, a significant increase from the 11% recorded a decade ago. Insurance companies are leveraging CVC as a tool to scout for promising start-ups and potential acquisition targets, often targeting early-stage investments and treating CVC as a form of traditional M&A. CVC has proven to be an effective strategy for insurance companies looking to stay ahead of the curve and navigate the rapidly evolving tech landscape. As the value of CVC-backed investments continues to rise, we can expect to see more insurance firms embracing this approach in the coming years.

Overall, the latest trends have proven to be a powerful tool for insurance companies to drive innovation and stay competitive in a rapidly changing industry.

To learn more about some of the startups mentioned, visit ourInsurtech platform and browse our ecosystem.

Challenges and opportunities for insurance trends

Challenges facing the insurance industry:

  • Claims inflation
  • Weak equity markets
  • Geopolitical tensions

Opportunities for the insurance industry:

  • Increased risk awareness (especially in health and life insurance lines) due to the pandemic
  • Increased demand for insurance products in times of uncertainty and instability
  • Increased investment income for insurance companies due to rising interest rates

What to expect in the insurance industry: 2023 and beyond

This is a year of transition for the insurance industry as it navigates complex economic conditions. As well-funded players look to acquire weaker insurtech companies, there is increased M&A activity in the startup space.

As climate change and sustainability become more pressing, there may be greater demand for insurance covering environmental risks like natural disasters, pollution, and resource depletion. Additionally, the insurance industry is expected to continue developing products and underwriting solutions to address new technological and cyber risks that may arise due to the rapid pace of technological change. These efforts will likely shape the direction of the insurance industry in the coming years.

Beyond 2023

Web3 and non-fungible tokens, or NFTs gained significant interest from insurance partners. This year, we have been providing education and workshops to our corporate partners about these technologies. We received requests from our partners around the area of blockchain technology, digital assets, metaverse, and NFT usage in insurance, and most requests were based on educational focus. Our partners wanted to better understand the basics of blockchain technology and its implications for insurance.

However, the volatility of digital assets makes it challenging for traditional insurers to fully grasp the risks associated with providing coverage for Web3. Insurtech companies are therefore working to identify more concrete opportunities in this space, despite the lack of a clear legal framework.

As the market evolves, we expect to see more incumbents implementing solutions in this space or partnering with insurtechs to stay competitive. The future of insurance is closely intertwined with the growth of Web3 and NFTs, and companies that are able to navigate this complex landscape will be well-positioned for success. Blockchain, the metaverse, and digital assets can play a vital role in different areas of the insurance value chain in the long run so we do consider it as a trend in upcoming years, dependent on the maturity of the space.

Comments from industry experts

Insurance Partners

Daniel Klaes (Head of Innovation & Ecosystem - Generali Deutschland)

Top 3 most impactful insurance trends you have seen in 2022?

“In 2022, three of the most impactful insurance trends that I experienced were a focus on real customer understanding and engagement, the widespread adoption of artificial intelligence, and the rise of embedded insurance. These trends have significantly changed the way insurers interact with and serve their customers, enabling more personalized and efficient experiences.”

The most impactful insurance trends you foresee in the future (2023 and beyond)?

“Looking towards the future, I foresee that the most impactful insurance trends will be the metaverse, a continued emphasis on real customer understanding and engagement, and the creation of insurance ecosystems.”

Edwin Hage (Director - Digital Transformation at Chedid Capital)

Top 3 most impactful insurance trends you have seen in 2022?

“In my opinion, the most impactful trends for 2022 included the creation of ecosystems and new ways of leveraging AI and data to deliver more personalized products, such as telematis for motor insurance and links to wellness solutions for health insurance"

The most impactful insurance trends you foresee in the future (2023 and beyond)?

“We can expect to see significant growth in cyber insurance products targeting B2C customers, as well as an increasing use of omnichannel solutions to engage customers across various channels throughout the policy cycle. Additionally, the continued development of insurance in the virtual world, or metaverse, is likely to be a trend in the coming years.”

Federica Dominoni (Innovation Project Manager - UnipolSai)

Top 3 most impactful insurance trends you have seen in 2022?

“Climate risk, digital health and smart mobility solutions were the top 3 most prevalent insurance trends we have experienced in 2022 where we saw much development and demand.”

The most impactful insurance trends you foresee in the future (2023 and beyond)?

For the most impactful insurance trend in 2023, we can foresee further development around the area of smart connected cities to promote economic growth while also improving the quality of life for citizens by using smart technologies and data analysis”

Venture Capital

Florian ​​Graillot (Founder and Partner - Astorya.vc)

Most impactful insurance trends you have seen in 2022?

“Insurtech in Europe was very active last year, despite what one might think. While the amount of money invested was down significantly, the number of rounds announced was up 10% compared to the previous year. And there is a lot of innovation ahead of us, with almost half of the rounds announced being below €3m (seed stage). This is just the beginning of insurance innovation.

If distribution was once again the most active part of the insurance value chain, with over 50% of rounds announced in that section, it is becoming more granular. In addition to B2C startups, which were still the most numerous, almost half of the money was invested in tools for brokers and 'embedded insurance' solutions. The latter was the buzzword last year!

Insurtech is definitely a European topic, with close to a third of every round announced last year coming from outside of France, the UK, or Germany. Note that this share has been growing since the inception of the industry, for example, up from 22% in 2019.”

The most impactful insurance trends you foresee in the future (2023 and beyond)?

“After a very intense year where insurtech was more active than ever with 10% more deals announced in InsurTech Europe during 2022 compared to a year before, the year ahead is full of opportunities. There are so many ways insurance could benefit from tech startups: from powering new players to enter the industry, to enabling incumbents to address emerging risks or tools for operational effectiveness.

In the usual ‘make or buy’ pattern, I expect re/insurers to have more opportunities than ever as M&A is to surge in the coming months. While the funding market has turned more challenging, not only startups might team up together but corporates could spot attractive solutions to accelerate their own digital roadmap !”

Clarisse Lam (Associate - New Alpha Asset Management)

Top 3 most impactful insurance trends you have seen in 2022?

“Cyber: The increasing prevalence and sophistication of cyber threats has pushed cybersecurity at the top of consideration for the insurance industry this year after a wave of high-profile cyber-attacks (e.g., JBS, Mondelez, Ireland’s healthcare system). Several startups, such as Dutch start-up Eye Security and French Stoik and Dattak, have raised an important round this year to address the growing market.

Health & Life: While P&C insurance has been the major focus for many insurtech, health & life have been gaining traction this year. The challenges posed by the COVID-19 pandemic, the financial and geopolitical instability, and the aging population are putting pressure on our current healthcare, life and retirement models, and customers are increasingly more mindful of this. As the general feeling of vulnerability and the loss of confidence in existing models increases, there is a growing demand for protection that can be met by the industry.

M&A Activity: The repricing of insurtech in the public market represented a great opportunity this year for incumbents to make strategic acquisitions and accelerate their digital transformation (e.g., Allianz acquiring Simplesurance, Travelers acquiring Trov) or, as VC money crunches, opportunities for insurtech to acquire their peers (e.g., Cover Genius acq. Booking Protect, Lemonade acquiring Metromile) and expand their offering or geographic scope.”

The most impactful insurance trends you foresee in the future (2023 and beyond)?

“In recent years, the insurance industry has made great strides in distribution, particularly through the use of digital platforms. Most of the insurtech were focused on this segment of the value chain, offering improved user interfaces, more efficient claims management, faster underwriting, and the ability to provide insurance at the point of need for customers. However, beyond distribution, there is still much to be done across the value chain, including innovation in product development, prevention, pricing & underwriting, and policy management. I think we will see even more progress in these areas, especially as insurtech are reorienting their focus from B2C to B2B given the current macro-environment.

New risks such as climate change, cyber, digital assets and new mobility present a challenge to the insurance industry, and they call for the development of new product, pricing, and underwriting solutions. We are still in the early stages of addressing these risks, which will shape the industry going forward.”

Kristian Kekonius (Associate - MTech Capital)

Top 3 most impactful insurance trends you have seen in 2022?

“Unit economics and hardened insurance market: 2022 has been fraught with high inflation and raising interest rates. This has put an end to the era of cheap money and have put a higher weighting on the value of growth. As a result, start-ups’ valuations have dropped considerably, with start-ups now prioritizing better unit economics and lower cash-burn overgrowth. However, InsurTech, especially MGAs, has been double whacked as insurance and reinsurance companies have simultaneously pulled capacity from the market. Hence, it is has become paramount that MGA InsurTechs write profitable business and can show that to capacity providers, while trying to improve CAC and overhead spend. Together, this explains why InsurTech MGAs like Hippo, Lemonade, Metromile etc. that have historically focused on growth at all costs with high CAC and poor underwriting have struggled so much in 2022.

Mergers and acquisitions: While great companies are still able to raise capital at decent valuation, good companies that raised large rounds in 2020-21 are struggling to raise new external capital. As funding becomes harder, a lot of start-ups are instead looking to get acquired and we see a lot of talk of consolidation in the industry with well-capitalized later-stage start-ups looking to acquire cash-poor companies using all-stock deals and then realize synergies to lower the burn-rate of the combined entities overtime and benefit from economies of scale. The most public case was Lemonade’s acquisition of Metromile. I believe this trend which gained momentum in the second half of 2022 will continue and get stronger in 2023 as companies that raised in 2021 start to run out of capital.”

Workflow tools: “The labor market has been extremely tight in 2021 and 2022, with insurance companies struggling to fill all the roles they needed within brokerage, underwriting, claims, and other core functions. As a byproduct, we have seen an increased focus on automation and workflow tools to improve the productivity of workers. In underwriting, Send Technologies and Federato are two good examples, while WeFox is the clear leader in helping brokers place products and manage administrative tasks for brokers thereby improving their productivity.”

The most impactful insurance trends you foresee in the future (2023 and beyond)?

AI and Machine Learning: it’s something that has been talked about for years and is already deployed within the industry, but I believe adaptation is still in its infancy and that in the next 2-5 years we will start to see large-scale adaptation which will have a profound impact on best practices in insurance and pricing of risk. A core problem is around the transparency of models and avoiding regulatory issues as AI/ML are blackbox solutions that can create unintentional biases against gender, race, etc.