On 9 December 2015, two laws and a regulation from the Commissariat aux Assurances regarding the insurance sector were published in the Mémorial, all three applicable as of 1 January 2016:
- the Law of 7 December 2015 on the insurance sector (“Law on the Insurance Sector”);
- the Law of 7 December 2015 amending the amended Law of 27 July 1997 on the insurance contract (“Law on the Insurance Contract”) and the amended Law of 8 December 1994 regarding annual and consolidated accounts of insurance and reinsurance companies incorporated under the laws of Luxembourg and regarding obligations related to the drawing-up and publicity of accounting documents for branches of insurance companies established outside Luxembourg (“Law of 8 December 1994”);
- the Commissariat aux Assurances Regulation 15/03 of 7 December 2015 regarding insurance and reinsurance companies (“CAA(1) Regulation”).
The purpose of the Law on the Insurance Sector is to implement the Directive 2009/138/EC of 25 November 2009 on the taking-up and pursuit of the business of insurance and reinsurance (“Solvency II Directive”) as amended. The legislator took advantage of this implementation to repeal and recast the previous law on the insurance sector of 6 December 1991 (“1991 Law”).
The Law on the Insurance Sector implements the Solvency II Directive requirements, based on three pillars:
- pillar 1 sets out quantitative requirements, including the rules for valuing assets and liabilities (in particular, technical provisions), for calculating capital requirements and for identifying eligible own funds to cover those requirements;
- pillar 2 sets out requirements for risk management, governance, as well as the details of the supervisory process with competent authorities; this will ensure that the regulatory framework is combined with each undertaking's own risk-management system and informs business decisions;
- pillar 3 addresses transparency, reporting to supervisory authorities and disclosure to the public, thereby enhancing market discipline and increasing comparability, leading to more competition.
Other provisions of the 1991 Law remain identical, but for textual adaptations and updates of references.
The CAA Regulation provides for the implementing measures of the Law on the Insurance Sector.
The purpose of the Law of 7 December 2015 amending the Law on the Insurance Contract and the Law of 8 December 1994 was first of all to implement the Solvency II Directive at the level of the insurance contract. Moreover, this law improves the provisions regarding the insurance contracts on legal protection.
Finally, the law introduces rules into the Law of 8 December 1994 regarding the provisions for fluctuation in the claims rate applicable to the reinsurance sector, which could not be maintained in the new Law on the Insurance Sector.
(1) The acronym "CAA" refers to the Commissariat aux Assurances.