Since 2013, the ACA Insurance Days have covered many topics. This year, the event is called "reshaping insurance". Does this mean that the sector is changing?
Marc Hengen. - Yes, it's a new situation. First there was the pandemic: the ACA Insurance Days are adapting to it again this year with a hybrid academic session and a reduced number of participants for greater prudence, in addition to two webinars.
Covid, as elsewhere, has influenced the sector, which has become fragmented, as successive lockdowns have led to new forms of work, and it was impossible to receive clients normally.
A remodelling is also taking place in relation to climate risk, which is the issue that everyone is talking about today, and which we need to formalise. Finally, there have been several regulatory waves, true tsunamis that have hit the insurance sector, which will be at the heart of the debates this year.
One of the market trends is the rise of private equity in life insurance. What is the advantage of this?
Private equity and life insurance in Luxembourg work together, that's not new. What is new is that it is attracting more and more interest from investors who are looking for better returns than with more traditional products, especially with the negative interest rates that exist in the banking sector.
One of the key themes of the first day of discussions was the "regulatory fatigue" in the insurance sector. What does this mean for businesses and consumers?
Let's be clear: this is not about criticising or questioning regulatory legitimacy, but about working towards smart enforcement. I was talking earlier about a regulatory tsunami, because these are not small changes that companies have to integrate. First of all, Solvency II, which has repercussions from the investment decision onwards, right up to the client's declarations. The same applies to the SFDR wave, which is the obligation to declare risks (according to different scenarios) related to climate and sustainable development. This regulation has an influence on the entire value chain of an insurer. Finally, there are the regulations relating to PRIPs (packaged investment products), which should protect consumers. These three obligations mix and, when added to the others and those that will come, lead to unreal situations. For example, today, if you take out an insurance policy with a client, you have to give him 185 lines of pre-contractual information. While regulation remains essential, does informing your customers well, really mean giving them 185 points to read before signing? We seek to identify what is really useful and intelligent to their decision making, and to preserve the balance between consumer protection and company protection.
Today, if you take out insurance with a client, you have to give him 185 lines of pre-contractual information.
Will Brexit continue to influence the insurance sector in Luxembourg in 2022?
I think that Brexit as such, i.e. the legal exit of the United Kingdom from the European Economic Area, has already had its main effects, as the regroupings and transfers of headquarters were prepared in advance and carried out immediately after the referendum. Financial services were not part of this exit agreement, so the worst case scenario has occurred, but it was anticipated. It is now a new fact of life in the European insurance landscape, and a reality that has created a favourable situation in Luxembourg and that should last. In 2022, if there are new arrivals, they will not be linked to Brexit.
The year 2021 was again marked by Covid, but also by violent losses in Luxembourg, Belgium and Germany. Will this impact the sector's results in 2022?
You are talking about the most expensive claim in the history of Luxembourg insurance, with the floods of 14 and 15 July... (more than €125m, editor's note). It was a hard blow, obviously unforeseeable, but Luxembourg insurers were able to absorb the shock financially, which is their role. This will inevitably have an impact on the results next year, but the costs were shared with the reinsurance companies of the market (the insurers of the insurers, editor's note), which bore part of the financial burden borne by the companies. This year, floods occurred in several European countries, a phenomenon that is becoming increasingly frequent. In order to remain in balance, and because the risk of recurrence is foreseeable, reinsurers will certainly have to increase their coverage rates next year.
The reinsurance sector is very active in Luxembourg. How can this be explained?
Reinsurance companies in Luxembourg take two forms: captive insurance companies, which are reinsurance companies created by and for industrial groups, and commercial reinsurance companies (of which Swiss Re is the leader), which insure insurers. Luxembourg is the European country with the most captive insurance companies (190, editor's note).”
Find the programme of the ACA Insurance Days .
This story was first published in French on . It has been translated and edited for Delano.