Luxembourg offers a unique policyholder protection framework.
The Commissariat aux Assurances is responsible for the supervision of insurance business. Its key missions are
- The examination of applications for approval submitted by insurance companies
- The prudential supervision of these companies and persons
- Attendance at international and European meetings with a view to the formulation of common standards
- The formulation of draft laws and regulations relating to the insurance sector and coordination of Government efforts for the systematic expansion of business activities in the insurance sector
The Commissariat aux Assurances is empowered at any time
- to request documents or information
- to conduct on-site or remote checks
- to call for changes in, or the elimination of, procedures
All missions and procedures within the remit of the Commissariat aux Assurances are intended to provide maximum safeguards for the interests and investments of policyholders.
Regulations applicable to the deposit of assets
Luxembourg regulations require life insurance companies to establish a strict separation between their own equity capital and assets linked to policies. Companies may therefore under no circumstances make use of customers’ assets for their own purposes.
A tripartite agreement (deposit agreement) is signed by the insurance company, each custodian bank and Commissariat aux Assurances. Policy-linked assets (or policy reserves) are required to be deposited and covered by this agreement, which authorises the Commissariat aux Assurances to intervene at the custodian bank and freeze the relevant accounts to protect policyholder investments.
Where insurance companies are affected by financial difficulties, liabilities arising from the execution of contracts will take precedence over any other liabilities of the Company.
Policyholder claims will be accorded an absolute preferential right in terms of repayment, enhancing customer security.