The EU Competitiveness Compass: What It Means for Insurance and InsurTech

The European Commission has published the EU Competitiveness Compass, a major initiative providing a strategic and clear framework to steer the Commission's work. While insurance is not explicitly mentioned, this does not mean the Competitiveness Compass will have no effect on the sector. Let’s take a deep dive.

A Strategic Vision for Europe's Future

The Competitiveness Compass sets out a path for Europe to become the global hub where future technologies, services, and clean products are invented, manufactured, and launched. It aligns with the EU’s goal of becoming the first climate-neutral continent.

The framework is structured around three key pillars:

1. Closing the innovation gap – Enhancing productivity through innovation by fostering a more dynamic industrial structure.
2. A joint roadmap for decarbonisation and competitiveness – Integrating decarbonisation policies with industrial, competition, economic, and trade policies to drive sustainable growth.
3. Reducing excessive dependencies and increasing security – Strengthening Europe’s economic policies by integrating security and strategic autonomy considerations.

In addition, the Compass identifies five horizontal enablers to reinforce competitiveness across all sectors:

• Simplification
• Removing barriers in the Single Market
• Financing
• Skills and quality jobs
• Better coordination

For the InsurTech sector, the first pillar—closing the innovation gap—is particularly relevant. Let’s explore how it could benefit insurance and InsurTech.

How the First Pillar Supports Innovation

The EU aims to create a more supportive environment for innovation by:

• Facilitating the establishment and scaling up of start-ups
• Developing a deeper and more efficient venture capital market
• Easing mobility and retention of talent
• Investing in state-of-the-art infrastructure
• Boosting innovation and research

Currently, market fragmentation, risk capital constraints, and insufficient innovation support hinder the ability of start-ups to grow and scale in Europe. A dedicated EU Start-up and Scale-up Strategy aims to remove these obstacles.

A key initiative under this strategy is the proposal for a 28th legal regime, which will simplify corporate law, insolvency, labour, and tax rules across the Single Market. This could directly benefit InsurTech firms looking to expand across the EU. However, the biggest impact will likely be on tech-driven InsurTechs operating outside the regulated financial services space (i.e., those not requiring an IDD or Solvency II license), as sectoral regulations may remain unchanged.

Another significant development is the European Innovation Act, which will enhance access to European research and technology infrastructures, improve intellectual asset protection (e.g., patents), and promote regulatory sandboxes for testing new ideas. This is particularly relevant for InsurTech companies leveraging deep-tech approaches, including AI-driven solutions that require substantial R&D investment.

Addressing the Growth Funding Gap

The Compass acknowledges that Europe does not lack capital, but its availability for start-ups remains a challenge. The EU’s Savings and Investments Union will introduce measures to boost European venture capital, helping scale-ups access growth funding. This can again directly impact insurance innovators.

But insurance comes to play from another angle as well as insurers and pension funds can also play a bigger role in financing. Currently, European pension funds and major insurers allocate only 0.01% of their $9 trillion capital pool to venture capital. Attracting more of this institutional investment could provide the long-term stability needed for later-stage InsurTech companies.

The Role of Data and Pension Reforms

Data is at the heart of insurance innovation, and the Commission’s upcoming Data Union Strategy will improve secure private and public data sharing. It will also simplify regulatory frameworks and accelerate the development of data-driven applications. This builds on existing EU data-related regulations and strategies.

Additionally, the EU will work on enhancing private and occupational pensions, helping citizens plan for retirement while channeling savings into the economy. Pension reforms will also focus on promoting longer working lives, active ageing, and inclusive labour markets. This aligns with the growing trend of insurance providers integrating health and preventive solutions into their core offerings.

Broader Implications for InsurTech

While the Competitiveness Compass doesn’t explicitly address insurance, several broader initiatives could still impact the sector:

• AI Gigafactories and Apply AI initiatives – Driving AI adoption across industries, including insurance.
• Quantum computing investments – Potentially transforming risk modeling and predictive analytics.
• Skills and workforce development – Addressing talent shortages in tech-driven sectors, including in insurance.

Final Thoughts

The Competitiveness Compass is a much-needed strategic framework, but I think we should be now careful not to use it as a pretext to block initiatives under the guise of “simplification.” In particular, policies that complement the Compass and push Europe toward a more innovative future should be actively supported.

Furthermore, I think that beyond this framework, Europe needs a mindset shift. When taking a long-term perspective, the continent has made remarkable progress over the past decade. Instead of focusing solely on barriers, we should foster greater public understanding of entrepreneurship and a more ambitious, risk-taking culture—both at the corporate and political levels. Regulations can always be improved, but true competitiveness starts with confidence and bold decision-making.