The recent introduction of the European Solvency II regime in 2016 substantially changed the Luxembourg regulatory framework for the insurance and reinsurance sector. The regime harmonized the pan-European supervisory system and related insurance regulations. The legislation addresses the amount of capital that European insurance and reinsurance companies must hold to reduce the risk of insolvency. At the EU level, regular reviews of the Solvency II regime have been undertaken since its implementation to ensure it remains fit for purpose.
Having a dedicated insurance regulator is great. They understand the language and complexity of insurance. The risk equation is very different from retail banking or investment management. Not all regulators around the world are capable of assessing such internal model frameworks. The CAA is a qualified and expert counterparty.
Luxembourg’s insurance regulator the CAA is a public institution, operating under the authority of the Luxembourg Ministry of Finance. It is exclusively in charge of the supervision of the insurance and reinsurance industry in Luxembourg. Its overriding goal is to ensures optimal protection for all subscribers.
We found the CAA to be very responsive to the questions that we asked. They were always professional and supportive throughout the whole process. The fact that we can communicate with them in English is extremely helpful for the company as well.
The CAA’s powers of supervision encompass Luxembourg-incorporated insurance and reinsurance undertakings, including professionals in the sector. Regulatory supervision also extends to activities carried out in Luxembourg by foreign entities through their Luxembourg branches under the Freedom of Services regime.
It is important to have a regulator who knows your business and understands your future needs. I am quite sure that after Covid-19 the needs of our clients will change. In adapting to this, you can have the best ideas in the world, but you will need the support of your regulator if you are going to achieve them. In Luxembourg, you are the regulator’s first concern.
Luxembourg insurance and reinsurance companies, as well as Luxembourg branches and subsidiaries of foreign insurers, must obtain an authorisation before starting operations. Authorisations are approved by the Ministry of Finance, with the CAA doing the work of reviewing, evaluating and granting applications. Each authorisation is insurance branch related and granted to insurance undertakings in relation to one or several specific types of insurance. Authorisations cover different kinds of risks and relate to either the life or the non-life insurance sectors.
INSURANCE:
A LEADING FINANCIAL CENTRE IN EUROPE
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Insurance in Luxembourg
The Luxembourg financial centre provides a wide range of financial services, acting as a bridge between global investors and markets.
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Freedom of Services in the EU
The Freedom of Services regime, introduced by the third EU life and non-life insurance directives and transposed into Luxembourg legislation.
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A Dedicated Insurance Regulator
The recent introduction of the European Solvency II regime in 2016 substantially changed the Luxembourg regulatory framework for the insurance and reinsurance sector.
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An International Life Insurance Hub in Europe
Luxembourg is the leading financial centre for the distribution of cross-border life insurance products in the Eurozone.
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Non-life Insurance Gaining Strong Momentum
Luxembourg’s traditional strengths in the insurance sector have been in the life and reinsurance domains.
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Luxembourg Reinsurance
Luxembourg is the largest captive reinsurance market in the EU. International companies from all over the world have established around 200 reinsurance undertakings in the Grand Duchy.
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Future Challenges for the Insurance Industry
The companies that make up the insurance industry together make up the largest group of institutional investors in Europe.
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