From cyber incidents to the challenges of increased regulations, Paul Johannes Spittau, Head of Group Carrier Relations & Insurance Mediation at GrECo International, chats with Kaido Kepp, Head of Finance & Administration IIZI in Estonia, to discuss the challenges Estonian businesses faced in the last year and what the future risk landscape looks like as a result.
Current Challenges Faced by Estonian Businesses
Spittau: Globally we are experiencing significant changes and a period of intense multiple crises. Could you elaborate on the particular developments and challenges that your clients are currently facing and those anticipated over the next five years?
Kepp: Our clients are navigating a number of different challenges right now and it’s not going to get any easier over the next five years. One major headache is the sheer complexity and expense of EU regulations. These regulations frequently entail significant responsibilities and can place considerable pressure on company management due to personal liabilities.
Cyber incidents and data breaches are also top of mind for many, affecting businesses through exposure and supply chain disruptions due to global outages.
Plus, Estonia’s small market means it is not a priority for international carriers, and international programme conditions might not always align perfectly with our local needs. Other concerns include energy prices, migration surges, rising unemployment and inflation, tax increases, access to health services, hybrid wars, and the spread of false information.
All in all, it’s a bit of a rollercoaster, but it definitely keeps us on our toes!
Political, Economic & Ecological Conditions
Spittau: How are current political, economic, and ecological conditions in your country shaping the corporate risk landscape?
Kepp: New and higher taxes have been implemented, including income tax, VAT, and car tax. Energy prices have also increased and will stay that way until the EstLink 2 cable to Finland is up and running again. Poor tax policies, high labour costs, unfriendly neighbours, and soaring energy and logistics expenses are also causing a lot of large companies to consider whether Estonia is the right place to invest in. Plus, there have been some serious claims against past or present management in large state-owned and private companies. All of this means the insurance industry must adapt to higher risks and potentially more claims, especially in the sectors hit hardest by these changes, such as logistics & transportation, construction, and manufacturing.
Future Investments and their Impact on the Risk Industry
Spittau: Which economic sectors or industries are anticipated to receive increased investments in the coming years, and how will this trend affect the risk industry?
Kepp: Several economic sectors are anticipated to receive increased investments in the future. The defence industry is set to benefit from a €100 million defence industry fund. Green energy projects, including nuclear power, are also expected to receive investments as Estonia aims to use primarily green energy by 2033. The technology sector will continue to see investments, particularly in deep tech, health tech, and AI, with 14% of Estonian enterprises already using AI technologies. The health industry is also attracting investments, with nine health industry companies raising capital in 2024. These trends will affect the risk industry by increasing the demand for specialised insurance products tailored to these sectors.
Spittau: What regulatory challenges are companies facing?
Kepp: As I mentioned earlier, Estonian companies are juggling quite a few regulatory challenges these days. Motor insurance which has a large share of non-life insurance market comprising almost 50% of the €600 million GWP in 2024 is currently experiencing a period of stability in terms of renewals, with no significant changes in pricing or risk appetite. However, there are several key challenges that this industry is facing. Estonia’s overall economic situation is affecting demand and purchasing power, and there is lively competition in the industry preventing quick pricing adjustments.
Aside from motor insurance, compulsory medical malpractice insurance kicked in last November, adding an extra €7.5M GWP to the market. We’ve also got changes to the MTPL law, which will broaden coverage to match European standards, including income loss and more objects under cover. Plus, there’s a tax change on health insurance and health promotion costs being treated as fringe benefits, which might shake up the health insurance market. And last but not least, companies must navigate the complexity of implementing international insurance programmes here in Estonia.
Spittau: What has been one of the biggest challenges in Estonia in the last year?
Kepp: Over the last year, cyber incidents have probably caused the most significant challenges in Estonia. A total of 6,515 impactful cyber incidents were registered in 2024, almost twice as many as in 2023. Nearly two-thirds of these incidents were related to phishing and scam websites, and the number of data breaches doubled, with 68 cases registered in total. The largest breach affected 700,000 data subjects, and one company was fined 85,000 EUR.
In response to these challenges, Estonia has recognised the necessity of enhancing cybersecurity measures and establishing comprehensive data protection protocols to shield our citizens and economy from similar significant incidents in the future.
New & Predicted Risks
Spittau: Are there any new risks that have arisen in Estonia in 2024?
Kepp: Pharmaceutical, IP and data protection disputes have expanded, reflecting the heightened complexity of the current landscape.
There’s also an insolvency trend which is indicative of economic pressures, with a 14% increase in bankruptcies, particularly affecting the construction, industry, and commerce sectors.
Additionally, corporate and financial crime is coming into focus, with historic allegations of money laundering becoming more prevalent.
Spittau: What risks do you predict will be trending in Estonia in 2026 and beyond and how should the insurance industry respond?
Kepp: Looking ahead to 2026 and beyond, artificial intelligence (AI) will present both risks and opportunities, particularly concerning data protection regulations, something which isn’t front of mind for many companies. The arrival of DeepSeek may intensify these challenges within the EU.
At the moment, ESG is seen as an additional administrative burden, however ESG issues will also become more prominent, with climate-and energy security-related debates expected to gain momentum in our region.
The insurance industry should focus on innovation to improve risk assessment and customer service. For ESG, insurers’ focus should be on integrating sustainable practices and enhancing climate risk management strategies, as well as actively communicating their commitment to ESG principles to attract conscious clients.
Paul Johannes Spittau
Head of Group Carrier Relations & Insurance Mediation
T +43 664 537 17 42
Kaido Kepp
Head of Finance & Administration
IIZI Estonia
T +3725111941
