Vol. 13 No. 4 (2025)
December 2025

Articles

Assessing the influence of digitalisation on systemic risk in the insurance sectors of European Union countries

Published 2025-12-28

  • Anna Denkowska
    • ,
  • Stanisław Wanat
    • ,
  • Joao Paulo Vieito

Anna Denkowska
Krakow University of Economics

Stanisław Wanat
Krakow University of Economics

Joao Paulo Vieito
Polytechnic Institute of Viana do Castelo

Abstract

Objective: The article aims to study how much digitalisation influences the systemic risk (SR) in the insurance sector of European Union (EU) countries.

Research Design & Methods: In this research, we introduce an innovative, quantitative method for exploring the impact of digitalisation and assessing the similarities and interconnections among all European Union countries’ insurance sectors from 2004 to 2018 within the framework of Industry 4.0. The study integrates statistical and econometric tools with network modelling techniques, focusing on the topological indicators of minimum spanning trees (MST) derived from multidimensional dynamic time warping (DTW) distances. We analysed two datasets. The first one comprises exclusively data describing insurance sectors, while the second incorporates data detailing both insurance sectors and the digitalisation processes of individual EU countries. We assessed the similarity of the sectors’ dynamics over the analysed period, examining network behaviour during subprime crises, periods of excessive public debt, and immigration-related crises in Europe.

Findings: The proposed tools made it possible to determine how digitalisation contributes to the increase in systemic risk in the EU insurance sector over the periods examined and effectively measure similarity levels, and outline indirect connections between insurance sectors.

Implications & Recommendations: Because similarity can be a potential indirect channel for systemic risk contagion, countries with comparable insurance sectors and shared digitalisation-related behaviours may undergo similar repercussions during global financial downturns. Research endeavours in the insurance sector must consider digitalisation indicators that encompass technological advancements and consumer behaviour.

Contribution & Value Added: We developed a new method to examine the similarity of the insurance sectors of the European Union countries and to assess the dynamics of changes in this similarity in the era of Insurance 4.0. Such an analysis allows for a long-term assessment of the possibility of spreading threats in the insurance sector throughout the European Union.

Keywords

digitalisation, dynamic time warping, minimum spanning trees, systemic risk, insurance sector

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Author Biography

Anna Denkowska

Assistant Professor in the Mathematics Department of the Krakow University of Economics (Poland). MSc in mathematics (Jagiellonian University), PhD in mathematics (Jagiellonian University). Her research interests include functional analysis, algebraic topology, PDE’s, statistics, risk modelling, and network theory.

Stanisław Wanat

Associate Professor in the Mathematics Department at the Krakow University of Economics (Poland), MSc in mathematics (Jagiellonian University), PhD in economics (Krakow University of Economics), habilitation in economics (Krakow University of Economics). His research interests include statistics, actuarial methods, risk modelling, and forecasting.

Joao Paulo Vieito

Associate Professor at the Polytechnic Institute of Viana do Castelo (Portugal), MSc in Finance (Catholic University of Porto), PhD in Management Sciences, Finance specialisation, Faculty of Economics (University of Porto), Managing Director at the School of Business Sciences at Polytechnic Institute of Viana do Castelo, Main chairman of the World Finance Conference. His research interests include business administration, gender, gender studies, gender equality, gender differences, neuroeconomics, neurofinance, behavioural finance, gender and development, capital Structure, stocks, sociology, markets, economy, finance, mergers, investment, banking, and financial risk management.

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