Dutch insurers stall on defence funding as NATO spending target looms

The Netherlands' ambitious plan to lift defence spending to 3.5% of GDP by 2035 is hitting a financial roadblock, as talks with domestic insurers over investment frameworks have stalled. The Dutch Insurers Association, which represents the sector in negotiations, says it lacks the expertise to conduct due diligence in the secretive defence industry and wants government assistance in screening companies. The Defence Ministry counters that screening remains the responsibility of investors.

Last substantive discussions took place in September, with no new talks scheduled. The impasse matters because Dutch insurers manage €455 billion in assets, a pool of capital the government hopes to tap as it seeks an additional €16-19 billion annually to meet NATO commitments. The ministry plans to source roughly half of future defence purchases from domestic and European suppliers.

Insurers say their ESG policies require detailed information about defence firms' products and customers, which is often unavailable due to secrecy. A ministry website compiling public supplier data does not fully address their needs, the association says.

Beyond screening, there is a structural mismatch. Insurers' portfolios are heavily weighted toward fixed-income instruments, not equities. The association suggests a government-issued defence bond, similar to France's BpiFrance programmes, could fit better and shift vetting duties to the issuer. Top insurers NN Group, ASR Nederland, and Achmea hold nearly €146 billion in fixed-income assets.

Some movement is visible. ASR made its first defence investment last year and is prepared to commit up to €100 million per transaction. Achmea raised its defence exposure from €20 million to €150 million in 2025. NN Group has updated its approach to support the European defence value chain. Yet all say they need more government-provided information to scale up.

Another hurdle is market size. The Dutch defence sector generates €10.2 billion in annual revenue, small compared to France, Germany, Italy, and Britain. PwC estimates the ministry will spend €62 billion on equipment by 2030, with €41 billion earmarked for domestic manufacturers. To handle that, the roughly 400 local component makers would need to triple or quadruple output by 2030. NIDV chief Hans Huigen suggests a €300-500 million loan fund could bridge financing gaps for scale-ups, though he questions whether enough companies exist to justify it. "It all comes down to reducing risk, rather than increasing returns," he said.