For its 10th edition, the ACA Insurance Days focused part of its webinar on the future of crossborder insurance in Luxembourg, inviting four experts to exchange their opinions on the subject: Florent Albert of Lombard International Assurance, Richard Williams of Convex Europe, Angus Scorgie, head of prudential regulation and international affairs at Insurance Europe and Claude Wirion of the CAA.
“Luxembourg is well known for being an insurance and reinsurance hub for crossborder insurance products sold under the freedom of establishment and freedom of services throughout the internal market,” products that are a positive thing for insurers and policyholders, said Pietra Hielkema of the European Insurance and Occupational Pensions Authority (EIOPA) in her opening remarks.
But, despite digitalisation and the pandemic pushing the development of crossborder insurance services on digital platforms further, worries linked to the rise of nationalistic and protectionist trends in Europe give way to worries about the services’ future.
Crossborder insurance a big share of Luxembourg products
In Europe, freedom of establishment and freedom to provide services are defined as services provided outside the country of establishment of a company, but within the EEA, says Wirion, honorary president of the CAA executive committee.
For Luxembourg, 70% of its insurance businesses are crossborder products within the EEA--a number that goes up to 93% if products outside the territory are considered. Within the EEA, Luxembourg writes out 28% of the crossborder premiums of the €106bn the overall crossborder business represents. Only Ireland outperforms Luxembourg within the EU, selling 34% of all crossborder business.
“Luxembourg is an important hub,” explained Albert, because many end users look for resilient and competitive solutions that aren’t always available in the country in which they reside.
But, as the speakers identified, some preexisting distrust against this type of service--mostly unfounded and caused by small mishaps, said the experts--could put pressure on the industry.
Optimistic prognostic for crossborder insurance
“Companies still see the big potential in crossborder business,” says Wirion, citing the fact that all UK companies have opted for a single hub rather than branches. Albert concurred, adding that “we need to stay vigilant in the face of new and upcoming regulation.” Luxembourg politics’ vested interest in making the country as competitive as possible would however help it in the long term.
Scorgie said that he is “quite optimistic” as “there is a willingness on at the political level to keep the integrity of the single market.” The Solvency II would allow supervisors to more easily review crossborder services. Luxembourg’s particular ecosystem and geographical location also make it “a very attractive proposition,” adds Richard Williams.
For now, therefore, Luxembourg’s crossborder insurance services seem to have a bright future.
The webinar can be seen in replay here.