Boosting Europe’s venture capital: why insurers need the right conditions to invest

As part of Insurance Europe's Investing from insurers' perspective series, Insurance Europe has published a paper on the venture capital (VC) asset class. The paper examines the structural and regulatory factors shaping insurers' current allocations to venture capital and outlines the market and policy conditions that could support prudent and sustainable growth in insurer participation.

The paper notes that Europe's VC ecosystem is underdeveloped compared to global peers, particularly at the scale-up stage. It highlights that, although VC represents only a small share of insurers' portfolios, European insurers remain important investors in the asset class in absolute terms.

At the same time, VC's higher risk, illiquidity, volatile returns and uncertain exit timing make it a challenging asset class for liability-driven investors such as insurers, whose investment strategies are designed to support predictable policyholder commitments.

Encouraging insurer's investment in VC depends on creating the right conditions - strengthening Europe's broader investment environment, including deeper capital markets, better exit opportunities and reduced regulatory fragmentation.

Read the full paper here