The conversations I am having with InsurTech founders have shifted. A couple of years ago, the question was almost always some version of “how do we grow faster?” Today it’s more often “how do we grow in a way that lasts?”

That shift matters. The European InsurTech market is maturing fast, and the distance between companies that will scale sustainably and those that will stall — stuck in pilots, point solutions, or narrow customer wins — is widening. The strategic choices founders make in 2026 will strongly influence which side of that divide they land on.

Here are the five forces I believe matter most right now — and what each one means if you’re building or leading a B2B software business selling into insurers, brokers, or MGAs in Europe.

1. The Funding Reset is Permanent — and Consolidation is Accelerating

Let’s start with the market reality that most founders are quietly aware of but rarely say out loud: the capital environment that existed in 2020 and 2021 is not coming back.

According to FinTech Global analysis, European InsurTech funding dropped to $1.7 billion in 2024 — a 25% fall from 2023 and 62% down from the 2020 peak. CB Insights’ State of InsurTech Q3 2025 report shows early-stage deal sizes shrank a further 24% year-on-year in 2025. This is not a temporary dip. It is a structural recalibration, and it is forcing the market to do something useful: separate businesses with real, recurring value from those built on growth-at-all-costs assumptions.

At the same time, M&A activity is picking up. InsurTech exits reached their highest quarterly level since 2022 in Q3 2025. Strategic acquirers are actively seeking proven B2B software with deep integration into carrier and broker workflows. And notably, the founders achieving the best outcomes are not waiting until growth stalls or investors force the issue. They’re engaging early, from a position of strength, with partners who understand the long-term nature of building in insurance.

The question isn’t whether consolidation is coming. It’s who it happens to and on whose terms.

2. AI is Moving from Pilots to Production — and Governance is Now Part of the Product

If you’re an InsurTech founder, the question is no longer whether AI belongs in your product. The question is whether you can help customers run it safely, explainably, and at scale in real insurance workflows.

By 2026, buyers have stopped asking whether your product uses AI. They are asking how well it works in practice. What buyers now care about is whether it works in production — in claims triage, underwriting support, broker servicing — and whether it comes with the controls needed to run it responsibly. Many insurers are also moving beyond copilot tools that assist individuals toward more agentic approaches that support full workflows. That shift increases the need for explainability, audit logs, bias controls, and human oversight for high-impact decisions.

EIOPA’s August 2025 Opinion on AI Governance makes the regulatory direction clear: AI in insurance should be managed within existing governance and risk frameworks, not treated as a separate innovation exercise. The EU AI Act’s general application date of August 2026 is adding further urgency.

For software providers, this means governance is no longer legal fine print. It is part of the product. The InsurTech businesses gaining ground right now are those that have made AI governance, decision traceability, and resilience controls visible features of what they sell — not afterthoughts.

At Codeoscopic, the leading Spanish InsurTech and an Upliift portfolio company, CEO Ángel Blesa has seen this firsthand. Working daily at the intersection of insurers and brokers, the business has built its growth on the principle that technology only delivers value when it fits real workflows and is governed properly.

As Ángel says:

“AI only creates value in insurance when it works within the processes people actually use every day. Our customers do not need more technology for its own sake. They need technology that makes their work faster, clearer, and easier to defend to their own stakeholders.”

3. Modular, API-First Architecture is Winning Procurement Decisions

Legacy cores and broker systems remain one of the biggest blockers to speed, AI adoption, and new product launches across European insurance. In 2026, that pressure is intensifying, but the response from buyers has become more nuanced.

Insurers and brokers are no longer looking for a single vendor to rip-and-replace their entire stack. They want progress without a multi-year transformation before value appears. That means modular, composable architectures, and API-first systems that plug into existing environments rather than demand a wholesale replacement.

For founders, this has a direct effect on go-to-market. Integration quality is no longer a technical footnote; it is part of the buying decision. When sales cycles are long and customer environments are complex, products that reduce implementation friction have a much better chance of moving from interest to adoption. In this environment, “fits into your stack” often beats “replaces your stack.”

4. Brokers Aren’t Disappearing — They’re Replatforming

One of the more persistent misconceptions in InsurTech is the idea that digital-first, embedded insurance models will eventually sideline the broker. The evidence points in a different direction. Brokers are not disappearing. They are replatforming.

The market is moving toward embedded and ecosystem-based distribution — integrating products into platforms customers already use, enabled by APIs. But this shift doesn’t reduce the broker’s importance; it changes their role. Brokers, MGAs, and distribution platforms increasingly need systems that allow them to distribute across channels, connect to partners, and support white-labelled or embedded journeys without adding manual work.

APIs are becoming the real distribution layer. Platforms that help brokers scale digitally can gain genuine leverage in the insurance value chain.

“We accompany them throughout this entire journey, providing top-level insurance technology so they can be as efficient as possible — in claims, pricing, customer management, and everything related to communications between insurers and their brokers, so that together they can carry out their work as efficiently as possible.”

Ángel Blesa, CEO, Codeoscopic (an Upliift portfolio company)

Broker consolidation is also reshaping the landscape. Larger broker groups are investing in technology to maintain their competitive edge as the market concentrates. For InsurTech software businesses with strong broker relationships, this creates meaningful opportunity — provided the product can scale alongside consolidating customer bases.

5. Regulation is Becoming a Competitive Moat

The EU’s evolving regulatory environment is raising the cost of entry for new vendors and quietly rewarding those already embedded and compliant. This is a dynamic many founders are undervaluing.

Three regulatory signals now sit directly behind buyer behaviour:

• DORA has applied since January 2025, requiring insurers and their technology suppliers to demonstrate operational resilience and third-party risk management.
• EIOPA’s AI governance opinion sets clear supervisory expectations for how AI should be managed within existing risk frameworks.
• The EU AI Act has a general application date of August 2026, with staggered obligations already in effect.

In practice, AI governance, data lineage, decision traceability, and resilience controls are becoming standard RFP questions. Buyers are actively cautious of black-box systems — not only for ethical reasons, but because those systems are harder to justify internally when something goes wrong.

For InsurTech companies, the opportunity is clear: software that reduces regulatory anxiety, demonstrates its controls visibly, and moves confidently through due diligence has a structural advantage over competitors who are still catching up. In Europe, compliance is increasingly becoming a commercial advantage, not just a cost.

Turning Trends into Growth: A Founder Self-Check

These trends are easy to describe and hard to act on. What tends to separate companies that scale from those that stall is not awareness of the themes, but discipline in executing against them.

A few questions worth sitting with:

• Which two or three customer outcomes do we improve most reliably today?
• What stops roll-outs in practice: data, integration, governance, or change management?
• Can we explain our AI approach to a risk officer in plain English?
• Are we ready for DORA-era resilience and third-party scrutiny?
• Do we make brokers and insurers faster together, or add friction between them?

Those questions often reveal whether a business is genuinely ready for the next phase of growth, or whether there is structural work to do first.

A Different Kind of Partner for a Different Kind of Moment

At Upliift, we work with founders of specialised insurance software businesses who are thinking about the long term. Not the next fundraise. Not the next twelve months. The next chapter.

Modernising an insurance value chain does not happen in one budget cycle. Governance, trust, resilience, and real integration take time. The businesses that get it right build on their culture and customer relationships, maintain focus as complexity grows, and treat structural challenges as competitive advantages rather than obstacles.

“The main help and support that Upliift provides us is the ability to think long term. When we design solutions, we do not have to think only about the next three months or the next year, but about solutions that truly have an impact in the long term — which is where we believe the real margin for growth and support for our clients lies.”

 Ángel Blesa, CEO, Codeoscopic

If you are leading a specialised insurance software business in Europe and these themes feel familiar, we would welcome a conversation. No hard sell. Just an honest discussion about what you are seeing in your market, what 2026 is likely to demand, and what the right next chapter could look like for your business.

This blog is written with input from Ángel Blesa, CEO of Codeoscopic. It’s a part of the series exploring the forces shaping European InsurTech. Read the other posts: Why ROI matters more than ever in InsurTech and Europe’s insurers gear up for an AI-driven transformation.