Delano: You were recently appointed as deputy CEO of Aca: what challenges will this role entail?

: First and foremost, Aca’s main mission is to defend and promote the industry. This involves navigating a complex and constantly changing regulatory environment, while ensuring that compliance is respected, growth is secured and the competitiveness of our sector--and more broadly of the financial centre as a whole--is maintained. One of our strengths and a guarantee of our competitiveness has always been a constructive and collaborative approach with our regulator, who must remain attentive to the right balance between enforcing our regulatory framework and maintaining an environment that fosters entrepreneurship. By working closely together, being aware of the economic and political environment around us, and adopting innovative approaches, Aca’s management aims to continue to develop and maintain strong relationships with its members, partners and stakeholders, both nationally and internationally.

Additionally, we must not forget that Aca is above all a large community made up of over 1,900 professionals who share common values and who work together to promote, develop and advance the sector. To move forward together, it is essential to maintain a degree of unity, by federating and animating our community.

Aca’s 2023 annual report mentions “critical challenges” related to corporate social responsibility (CSR). What’s so challenging about it?

The challenges associated with corporate social responsibility are numerous. While CSR must be managed internally by each company, it’s clear that ESG risks must also be managed.

Sustainable finance is one of the cornerstones of these ESG requirements. It’s a priority for Luxembourg’s financial sector as well as for Aca, which has proactively--to best support its members--set up targeted working groups, such as the Sustainability Insurance Regulation Group and the Sustainability SFDR Group. While the first working group is responsible for deciphering the new regulations in this area--such as the Corporate Sustainability Reporting Directive, the Corporate Sustainability Due Diligence Directive and the Sustainable Finance Disclosure Regulation--the second working group aims to ensure that our members have sufficient information and guidelines for their respective implementation.

It also references “(over)regulation.” Is there too much regulation currently? Which regulations should be cut or altered from your point of view? And how would their goals be otherwise met?

Regulation is fundamental to the stability of the sector and the protection of policyholders. But, as with everything, care must be taken to ensure that quantity doesn’t compromise quality. Too much regulation can hinder innovation and competitiveness. Aca advocates a balanced approach that promotes corporate responsibility while fostering an environment conducive to innovation and growth. In this context, we work daily with the various stakeholders at the national and European levels to maintain a dialogue and seek the right balance between regulatory requirements and an environment conducive to economic players.

However, we see on a daily basis that the proliferation of regulations tends to produce the opposite of the desired effect. In the end, consumers find themselves drowning under a mountain of information required by the regulations, whereas simpler, more easily digestible and controlled information would give them the necessary protection they are looking for. In this respect, I would like to quote the former finance minister, Pierre Gramegna: “The whole directive, nothing but the directive.”

A Munich Re report from January estimated that natural disasters caused losses of some $250bn globally in 2023. What is the insurance sector doing about the climate crisis?

The essential role of insurance for society and the economy is to protect the assets of individuals and businesses, as well as to provide for the future. In recent years, we have seen the addition of a further societal role: insurers and reinsurers have a decisive role to play in the fight against the climate crisis and the natural disasters hitting us and posing a challenge to society as a whole. These natural disasters are becoming more numerous and frequent, and the final cost is constantly increasing. We’ve seen this locally with the tornado of 2019 and the floods of 2021, which cost Luxembourg insurers almost €250m.

Our sector tackles these issues by focusing on three key areas: prevention, understanding risks and protection.

According to a factsheet from the European Insurance and Occupational Pensions Authority, over half (57%) of Luxembourg SMEs have no cyber insurance at all. Is this important?

I’m not going to surprise you by saying that, obviously, insurance cover is essential, all the more for businesses given the challenges they face. Cyber insurance has become essential, as cyber threats are constantly evolving. As we saw earlier this year with numerous attacks on government websites, this emerging risk is now a reality. Yet there is a paradox: the risk has never been so high and yet demand for cyber insurance products is increasing modestly.

There are several possible explanations for this, but first of all I think that the ‘insurance’ reflex does not yet exist when it comes to cyber threats--certainly not at the same level as insurance for your car, home or even vacations. Large corporate groups are very aware of the cyber risk and are already implementing protective measures, which they are continuing to develop. SMEs, on the other hand, are lagging behind. Security does of course have a cost, as does insurance, even if these are threats we can quickly find ourselves powerless to deal with. In this context, insurers can play an important role: as with other products, insurance is there to repair the consequences of damage, from a financial point of view, but it is also attentive to the anticipation and prevention of the risk itself.

This article first appeared in  of Delano magazine.