Dutch Insurers Hesitate to Fund Netherlands’ Defence Spending Push

AMSTERDAM — The Netherlands’ plans to significantly increase defence spending are facing a financing challenge as major domestic insurers remain reluctant to invest heavily in the country’s defence industry, citing a lack of transparency and difficulties in assessing companies against environmental, social and governance (ESG) requirements.

The Dutch government plans to raise defence spending to 3.5% of gross domestic product by 2035 to meet its NATO commitments. The Defence Ministry estimates that achieving the target will require an additional €16 billion to €19 billion annually in defence spending.

Dutch insurers collectively managed about €455 billion in assets at the end of March, including pension funds they own, making the sector a potentially significant source of capital for expanding the country’s defence capabilities. However, discussions between the government and major insurers over establishing a framework for defence investment have stalled.

The insurers say the defence sector presents particular challenges because many companies operate under strict confidentiality requirements. They argue that they need more information from the government about defence companies’ products, customers and supply chains to determine whether potential investments comply with their ESG policies.

The Defence Ministry, however, maintains that investment screening is ultimately the responsibility of individual investors. It has established a website compiling publicly available information on defence suppliers, but insurers say the material does not fully meet their due-diligence requirements.

Another obstacle is that insurers generally prefer fixed-income investments, such as government and corporate bonds, rather than direct equity investments in individual defence companies. The Dutch insurance sector has therefore suggested that the government consider issuing defence bonds or establishing a sovereign debt instrument similar to initiatives introduced in France.

French state-backed investment programmes have already sought to channel institutional and retail capital into European defence companies, providing a possible model for the Netherlands as it seeks to mobilise additional funding.

Interest among Dutch insurers in defence investments is nevertheless increasing. ASR Nederland made its first defence investment last year and has indicated that it could commit up to €100 million per transaction, while Achmea increased its defence exposure to €150 million in 2025 from €20 million. NN Group has also expanded its approach to support investment in areas of the European defence value chain.

The Netherlands faces an additional challenge because its domestic defence industry is relatively small compared with those of major European economies. The sector generated about €10.2 billion in revenue in 2025, while the government is seeking to source roughly half of future defence purchases domestically and from European suppliers.

A PwC Netherlands assessment estimated that around €62 billion could be required for defence equipment by 2030, including approximately €41 billion expected to benefit Dutch manufacturers through direct or subcontracted work. Domestic suppliers would need to substantially expand production capacity to meet this potential demand.

Industry representatives have proposed a €300 million to €500 million loan fund to help smaller defence companies expand, although questions remain over whether enough companies currently have the scale and capacity to absorb such financing.

As the Netherlands accelerates its defence investment programme, the government faces the dual challenge of mobilising private capital and reducing the risks that have kept institutional investors cautious. Without clearer information and suitable risk-mitigation mechanisms, insurers could remain largely on the sidelines despite their substantial financial resources.