Luxembourg remains a specialist in offering life insurance solutions beyond its borders, this branch, representing 86% of activity in 2018, now represents only 66%. The non-life insurance sector has taken over. Between 2018 and 2020, housing contracts rose from a weight of 6% of activity to 13%; civil liability from 3% to 13%. Auto insurance doubled in volume from 2% to 4% during the same timeframe.

It’s a shift accentuated by Brexit, according to ACA. “Following the UK's exit from the European Union, many international non-life insurance players have chosen Luxembourg as their European headquarters. These new players have developed two main areas of activity there: general liability and property insurance."

ACA nevertheless underlines that despite this gradual rebalancing of life and non-life activities, the Luxembourg market remains a specialist in the offer of cross-border insurance solutions.

Preeminence of France for life insurance

Life insurers have collected €21b in premiums on the local and international markets, a decrease of 25% over one year. Non-life insurers collected €13b in premiums, an increase of 5%. The increase breaks down into +3% on the local market and +5% on the international market. For insurers, the international market accounts for 93% of the activity (58% for life activity and 35% for non-life activity)and the local market 7% (7% for the life activity and 3% for the non-life activity).

Five markets represent 81% of the business in life insurance. In order of importance, these are France (7.6b premiums), Italy (3.8b), Germany (1.45b), Belgium (1.44b) and Spain (1.12b). Over the past five years, the French market has remained the dominant one, representing 40% of the overall market. Main developments over the last five years include the strong growth of the Spanish market (+220% between 2016 and 2020) and the contraction of the Italian market in 2020 (-36%) after growth of +37% between 2016 and 2019.

For 2020, ACA notes a significant contraction of the three largest distribution markets for Luxembourg life insurance products (France, Italy and Germany). France, with a 14% drop in direct premiums collected, is resisting the overall market drop of -18%. The biggest drop concerns the Italian market, which fell 36% in 2020, after -5% in 2019, i.e., a cumulative drop of 39% over the last two years.

This article was originally published in French on Paperjam and has been translated and edited for Delano.