European insurers have proposed several rule changes that would help to boost their own venture capital (VC) investments
According to Insurance Europe, Europe’s VC market remains significantly underdeveloped compared to global peers. Investment levels lag the US, late-stage funding and IPO markets are shallow, and promising scale-ups often relocate abroad in search of better growth opportunities and deeper capital markets. European insurers manage substantial long-term capital, including VC allocations. While those are small in relative terms, insurers investments in VC are significant in absolute terms making insurers key contributors in the VC environment.
Structural factors limiting insurers investments in the asset class include its higher volatility, higher risk, illiquid nature, small ticket sizes and analysis-intense nature.
Apart from improving overall competitiveness and growth opportunities for businesses in Europe the strategic priority, Insurance Europe argued, should therefore be to strengthen Europe’s VC and capital market ecosystem itself.
“International and EU experience in some EU countries shows that well-designed public–private partnerships can catalyse sustainable private investment by improving market depth, scale and exit opportunities,” it stated.
“Policy should prioritise improving its market environment - deeper late-stage markets, stronger IPO channels, reduced regulatory fragmentation and scalable investment platforms. A more competitive and predictable ecosystem will naturally attract long-term institutional capital in a manner consistent with insurers’ fiduciary duties and liability structures.”
