Sector covered in the first phase 2002/03:
Insurance and Pension Funding Services


The insurance sector covers long and short-term risk dispersion activities with or without a savings component. The according NACE Rev. 1 chapter 66 is named "insurance and pension funding, except compulsory social security" and comprises three basic activities:

  • life insurance (NACE 66.01),
  • pension funding (66.02),
  • and further insurance activities (66.03).

"Further insurance activities" include accident, fire, health, real estate, transport, assets, claim and third party insurance. "Pension funding" does not include systems with mainly public sources. Reinsurance is not listed as a separate category because many general insurance firms also offer reinsurance services.

Basic economic data

European overview: There is not yet a uniform structure of European insurance industry. The single insurance market, formally existing since 1994, did not harmonise all preconditions for market entry and activity, but only a few legal issues. In the EU there are as many insurance economies as countries. The most important insurance nations in terms of primary insurance premiums are the UK (163 billion Euro), Germany (123) and France (105).

Number of businesses: In 1997, 4212 insurance companies were active in the EU, a decrease from 5422 in 1990. However, in Luxembourg and Ireland, the number increased from 196 to 330 respectively 81 to 101 in this period of time. This increase illustrates the attractiveness of the two countries for finance firms due to tax benefits and other benefits. The largest share of insurance firms in the EU is dealing with non-life insurance (62.3 %).

Market structure: After the opening of the common market, a wave of mergers and acquisitions took place in the European insurance sector, mainly between companies of the same country. Many companies do not only serve the market in their home country. There is a trend towards large insurance or financial groups operating on a European level, still leaving space for specialist insurers on a national or even regional level. Consequently, the insurance market is dominated by large firms: In 1996, 85.9 % of the employees in the EU-15 insurance firms worked with companies larger than 250 employees, and 72.2 % of the turnover was generated by large firms.

In 1997, the largest shares of net premiums were covered by motor insurance (33.4 %), accident and health (25.2 %) and fire/other claims (20.6 %).

Employment: In 1996, employment in EU insurance firms was estimated to a bit less than a million (967 000). According to the 1998 labour force survey, the share of female employees was 47.4 %.

Growth trends: Considering the crisis of social insurance systems in all European countries, the insurance sector is likely to grow in the coming years. For example, the German government introduced a public support scheme for private pensions in 2001.

Reasons for selecting the insurance sector

The insurance sector is of particular interest for the ICT and e-business market watch project due to two main reasons: Firstly, the insurance sector is one of the most important service sectors regarding its basic function for the whole economy. Modern, highly industrialised and technology-driven economies are challenged by higher risks than ever, which was plainly shown by the events of September 11. Secondly, since the insurance business is organised in a very decentralised manner, optimising business processes between headquarters, agencies and salespersons is a constant challenge. Against this background, ICTs can play a particularly vital role in the insurance sector, by allowing immediate access to data from any location.

Role of ICT and e-business

To some extent, the insurance sector has been quite conservative in applying new ICTs, although established firms are increasingly contested by newcomers offering insurance polices exclusively through the Internet. A sector specific impediment, however, for applying B2C e-commerce via the internet is that many customers prefer personal consulting, mainly because of the inherent product complexity, particularly as far as life insurance and pensions are concerned. Currently, because of the introduction of the Euro on the one hand and because of ongoing mergers and acquisitions on the other hand, marketing strategies and market shares as well as developing new products are generally given higher priority by insurance firms than implementing and applying new technologies.

On the other hand, the highly competitive environment forces the insurance firms to invest in ICTs. Call centres have a growing importance as a distribution channel. E-business may well be identified as a means to cut costs in insurance firms, particularly for bought-in services like rating, asset management and administration.

European associations

  • CEA - European Insurance Committee, 3 bis, rue de la Chaussee d'Antin, F-75009 Paris, Phone: ++33 1 44 83 11 83, Fax: ++33 1 47 70 03 75,
  • ICMIF - International Co-operative and Mutual Insurance Federation, Denzell House, Dunham Road, GB-Altrincham WA14 4PD, Phone: ++44-161-929-5090, Fax: ++44-161-929-5163,