Bill of law to modernise the insurance sector

On 24 March 2023, bill of law 8184 (the “Bill of Law”) was filed with the Parliament. It aims at (i) implementing Directive 2021/2118 amending Directive 2009/103/EC relating to insurance against civil liability in respect of the use of motor vehicles, and the enforcement of the obligation to insure against such liability into Luxembourg law and (ii) amending several Luxembourg laws, such as the law of 7 December 2015 on the insurance sector (the “2015 Law”).

As far as the 2015 Law is concerned, the Bill of Law inter alia provides for an adjustment of the governance structure of the Commissariat aux assurances (the “CAA”) while increasing the number of the members of its board to seven. It also describes the cooperation between the CAA and the upcoming Motor Insurance Insolvency Fund (Fonds d’Insolvabilité en Assurance Automobile).

Due to inflation, the amounts expressed in euro regarding the definition of large risks and the export credit insurance operations without guarantee of the State performed by the Office du Ducroire are reviewed.

The 2015 Law is also modernised by the introduction of new information and communication technologies (“ICT”), as set out in Regulation 2022/2554 on digital operational resilience for the financial sector (the so-called DORA). Luxembourg insurance and reinsurance undertakings may outsource the digital preservation of documents and related data and their processing to a critical third-party ICT service provider subject to the supervision of an European Supervisory Authority, without however compromising their ability to provide the CAA without delay with the documents and data concerned by the outsourcing.

Regarding domiciliation activities, any management company of captive insurance undertakings (respectively management company of reinsurance undertakings) may act as a domiciliary of companies, i.e. accepts that one or more captive insurance undertakings (respectively reinsurance undertakings) and, where appropriate, one or more companies belonging to the same group as the latter, establish a head office with it (i) to carry on an activity within the scope of their corporate purpose and (ii) to provide any services related to that activity. Any management company of insurance undertakings in run-off (that are legal persons whose business is to handle the daily management of one or several direct insurance undertakings which have ceased the underwriting of new insurance contracts) may act as a domiciliary of companies, i.e. accepts that one or more insurance undertakings in run-off establish a head office with it to (i) carry on an activity within the scope of their corporate purpose and (ii) provide any services related to that activity.

Furthermore, insurance holding companies under the supervision of the CAA must have their accounts audited by an approved auditor, as is the case for insurance or reinsurance undertakings or pension funds, insofar these insurance holding companies are also part of the scope of control at group level.

For life insurance, the Bill of Law clarifies the procedure for the application of the law of 30 March 2022 on inactive accounts, inactive safe-deposit boxes and unclaimed insurance contracts.

Finally, some definitions are added in the 2015 Law, such as “subsidiary” and “qualified participation” regarding the distributors of insurance and reinsurance products, or “branches” which refer to any permanent presence of an undertaking in the territory of a third country, even where this presence does not take the form of a branch but is by means of a mere office.

The Bill of Law is currently under legislative process and may be amended.

For more information on DORA, please refer to our e-alert.

Vivian Walry
Partner | Avocat à la Cour

Benjamin Bada
Partner | Avocat à la Cour

Mélanie Poirrier
Managing Associate | Avocat à la Cour

Sarah Hantscher
Managing Associate | Avocat à la Cour

Anne Picot-Guillot
Professional Support Lawyer