In accordance with European directives, lawmakers in Luxembourg have established a strict regulatory framework designed to provide utmost protection for savers' interests. This regulatory framework provides a model and a reference for many neighbouring countries and offers many specific features that are extremely beneficial for the consumer.
In particular, it is the establishment of this unique system of safeguards that has contributed to bolstering the confidence of European consumers in products issued in Luxembourg.
The Commissariat Aux Assurances (C.A.A.) is Luxembourg's insurance industry prudential organisation. This organisation continuously monitors insurance companies in order to ensure compliance with all prudential regulations and solvency.
The criteria for obtaining approval mainly concern fitness for office and honesty of their directors and the quality of the company's shareholding.
The legislation in Luxembourg requires insurance companies to cover their commitments to their clients very precisely via assets that are equivalent in quality and quantity, in order to ensure that they are in a position to honour all undertakings entered into at all times.
Also with a view to guaranteeing savers failsafe security, these assets representing undertakings are also deposited in separate accounts with an accredited depositary bank. The C.A.A. therefore carries out audits to ensure that the total value of the contracts issued by the company is consistent with the value of the assets deposited in these accounts by the company. The security of the client's assets is therefore ensured and regularly monitored by the C.A.A.
The holder of an insurance policy issued in Luxembourg is the holder of a specially protected claim against the company. In fact, he benefits from a preferential right that prevails over all other creditors (public revenue office, social security organisations, employees, etc.) that can be exercised in connection with the regulated assets (*). He also has a preferential right, though to a lesser extent, to the assets of the insurance company itself.
(*) These are assets deposited with the depositary bank in representation of commitments undertaken by the insurer in relation to its clients.