The minister of finance, (CSV), emphasised the pivotal role of innovation and collaboration in maintaining Luxembourg’s position as a global financial hub, in his remarks to Aca Insurance Day.

More than 750 insurance sector professionals attended the annual hallmark event,  organised by the Luxembourg Insurance and Reinsurance Association (Aca) at the European Convention Centre Luxembourg on 21 November 2024 .

Reflecting on his first year in office, Roth highlighted the government’s commitment to fostering a competitive and sustainable financial ecosystem under the coalition programme, “Strengthening Luxembourg for the Future.” He stated that a strong financial sector underpins Luxembourg’s economy and welfare system, adding that the government has delivered on promises, including boosting purchasing power and addressing housing challenges.

According to Roth, key initiatives included:

- Corporate tax reduction: Effective 2025, corporate tax will decrease from 17% to 16%, bolstering business competitiveness.

- ETF tax exemption: Actively managed exchange-traded funds will be exempted from the subscription tax, facilitating new market opportunities.

- Talent incentives: A tax exemption of 50% on gross annual salaries up to €400,000 for skilled professionals relocating to Luxembourg.

These measures, alongside a sustainable finance action plan, aim to secure long-term growth while enhancing the financial sector’s positive societal impact.

Embracing change and opportunity

Acknowledging the accelerating pace of change, Roth encouraged the insurance industry to view challenges as opportunities. Highlighting Luxembourg’s dominance in alternative investments, where the nation has grown its European market share from 16% to over 60% in the past decade, he called for further expansion into private assets and digital finance.

Roth also identified blockchain technology and tokenisation as transformative shifts, noting that Luxembourg has already positioned itself as a leader in digital asset innovation. “We must position our financial centre even more strongly as a digital asset competence hub,” he stated, stressing the importance of attracting talent and fostering innovation in future-oriented fields.

Regulation

Roth reaffirmed his commitment to reducing bureaucracy and over-regulation, which he described as obstacles to competitiveness. Highlighting European initiatives such as Solvency II and ESG frameworks, he assured attendees of the government’s active role in shaping regulations to suit Luxembourg’s unique characteristics.

In his speech, Roth pledged swift action on legislative updates, including:

- Solvency II review: Draft legislation reflecting simplifications by summer 2025.

- Insurance recovery directive: Comprehensive implementation by year-end 2025.

- Resolution authority: Establishment of a dedicated body within the Insurance Commission (CAA) of Luxembourg.

“The whole directive and nothing but the directive” will be Luxembourg’s guiding principle, Roth emphasised, advocating for a pragmatic and competitive regulatory environment.

Competitiveness

Drawing from Mario Draghi’s recent on Europe’s competitiveness, Roth called for decisive action to close the innovation gap with the USA and Asia. Luxembourg, he argued, is ideally positioned to lead this charge, leveraging its advanced financial toolbox and cross-border investment expertise.

Concluding his address, Roth expressed confidence in Luxembourg’s resilience and innovative spirit. “The best insurance for tomorrow is innovation today,” he declared, urging the sector to embrace change with courage and confidence.