Hiscox bets on European growth after Lokky deal

July 16 - (The Insurer) - Hiscox is doubling down on its European ambitions with its recent entry into Italy signalling a new phase of targeted regional expansion for the carrier, regional CEO Robert Dietrich told The Insurer.

The acquisition of digital platform Lokky, first reported by this publication in early July, is the latest step in the (re)insurer’s strategic push to unlock growth opportunities across Europe’s fragmented yet sizeable SME insurance market, particularly within digital distribution.

Founded in 2018, Milan-based Lokky serves micro and small businesses through a proprietary algorithm-driven platform, offering tailored liability, property, cyber and legal coverage across more than 400 business types.

Though the terms of the deal were not disclosed, the acquisition marked a strategic milestone for Hiscox Europe given that Italy had long been on its radar.

Dietrich said Italy represented a “good strategic fit” for the carrier, as he offered a bullish outlook on Hiscox’s ability to grow at pace within Europe's increasingly competitive insurance landscape.

'ITALY WAS THE MISSING PIECE'

Dietrich said Lokky would provide a strategic platform to enable deeper penetration into one of the continent's most underserved SME insurance markets.

“We want to do business in Italy with Italians, and we’ve had our eye on Italy for some time. It very much felt as though this was a missing piece for our platform,” he said. “It’s the third-largest economy in the eurozone yet remains underinsured in the micro and small business segment. With nearly double the number of micro-enterprises compared to Germany, the demand for cover and the opportunity for us is huge.”

Dietrich said Lokky's strengths in automated underwriting and digital distribution were particularly attractive for the carrier, given that Hiscox Europe already auto-underwrites almost 80% of its business.

“The majority of our business across the continent is written through brokers, but we’re seeing increasingly that our touchpoints are becoming digital. We’ve invested heavily here and are very much pioneering this space in Europe, which is behind the curve compared perhaps to the UK. The ambition is to make it as easy as possible for the broker to access our capacity across multiple lines and to make that buying journey as seamless as possible for the end customer.”

HISCOX EUROPE POSITIONED FOR GROWTH

With the integration, Hiscox now operates in 10 European countries, collectively accounting for nearly 70% of European GDP.

Hiscox first entered the continent in 1993 with the launch of a domestic French operation, with Germany following a year later. The company has pursued a “greenfield” build-out across the continent and now operates in France, Germany, Ireland, Spain, Portugal, Belgium and the Netherlands. Hiscox has also invested in bancassurance partnerships in Iberia and in pan-European MGA platforms.

Speaking alongside Dietrich, Hiscox group CEO Aki Hussain said the European unit is increasingly proving a meaningful contributor to the group.

“Over the past decade we’ve seen that the business delivers exceptional growth – it is now around 27% of our overall retail book and we do not see that growth abating. It has not been a quick process, but we now have a scalable European platform that is already a meaningful contributor to the group, and which is now positioned to grow into what we see as a highly attractive marketplace.”

At the group level, Hiscox reported insurance contract written premiums (ICWP) of $4.8 billion for 2024, an increase of 3.7% year on year. For Hiscox Europe, the regional division posted $656.5 million in ICWP for 2024, up 7.6% on a constant-currency basis, with particularly strong contributions from Germany and France. That growth has continued into the current year, with first-quarter premiums rising 8.8% to $273.5 million.

“This is not growth for growth’s sake,” Hussain added. “It’s about smart, sustainable expansion. We’re being deliberate in where we invest – Italy fits our strategic profile: large, underserved, digitally evolving and aligned with our strengths in SME risk.”

Hussain said the opportunity for Hiscox is manifold. He noted that its chosen markets all have large economies, while insurance penetration remains “relatively low”, particularly for SMEs and “underserved” high-net-worth clients.

“We are already the go-to SME insurer for cyber, with a 20% market share across our European markets, but we have a lot of room to continue this trajectory and grow market share across multiple lines including D&O and PI,” he said. “There’s opportunity across multiple channels and countries, targeting SMEs and high-net-worth individuals.”

NAVIGATING A FRAGMENTED MARKET

Despite the opportunities in Europe, challenges remain owing to regulatory divergence, cultural nuances and fragmented distribution channels. Yet Dietrich sees Hiscox’s localised strategy as a key strength.

“We don’t believe in a one-size-fits-all model,” he said. “Our European operation is decentralised where it needs to be but aligned under the Hiscox banner and a common digital and risk framework. That balance allows us to be both nimble and scalable.”

Asked whether Hiscox could pursue additional acquisitions in Europe, Dietrich was open but cautious. “We’ve typically preferred organic, greenfield growth so while we’re always looking, the bar is high. The Lokky deal worked because it ticked the boxes – technology, talent, market fit and cultural alignment.”

While the growth strategy for Hiscox Europe remains on track, geopolitical shockwaves – including a land war in Europe and U.S. President Donald Trump’s ever-evolving foreign policy – highlight wider volatility.

Neither Hussain nor Dietrich would comment on the White House's proposed tariff arrangements, but there was an acknowledgement that the hit to Europe will be limited, though some regions and industries could suffer and may need protective measures.

However, there was agreement that despite the geopolitical uncertainty, the potential for Europe to focus on domestic manufacturing and for EU entrepreneurs and SMEs to remain in Europe would likely have a positive effect for Hiscox.

THE DIGITAL DIFFERENTIATOR

Dietrich added that Hiscox’s European strategy hinges on digital agility, with the company increasingly pivoting toward algorithmic underwriting and AI-enabled distribution.

“Our underwriters are trained centrally and then deployed out into those local markets where their local expertise is key. And when we're auto-underwriting, we're effectively codifying 100 years’ worth of underwriting expertise from across the group.

“All of that experience is captured within the rules or the algorithm that we use to provide a price to the customer which in turn helps provide good outcomes.”

Hussain echoed that sentiment, highlighting that Hiscox Europe is now nearing completion of its long-running digital transformation.

“It goes right back to the underwriting ecosystem but goes deeper and wider than the underwriter because that's the old way of doing things. It’s about aligning with our marketeers, because they're targeting customers that are within appetite for our specialist products. It goes to reserving actuaries, pricing actuaries, as well as the underwriters, the technology folk, who are building these fantastic customer journeys.

“Our digital DNA has been a core part of Hiscox’s retail transformation in Europe. The transformation journey that we have been on should be complete during 2026. That will enhance our capabilities not just in Italy, but across our European network.”