President of the ACA since his election in March 2020, Marc Lauer unveils the action plan for his new mandate, and returns to the challenges and opportunities for the insurance and reinsurance sectors. Interview.

 

What goals have you set for your new mandate?

 

When I started planning for my mandate, which was due to begin in March 2020, the world was a very different place. Since then, a lot has changed.  Our world has changed fundamentally since the appearance of Covid-19. We are slipping into the worst recession since World War II and, although the spread of the virus may be under control, as yet the virus itself has not been defeated. Like all other industries, the insurance and reinsurance sector, which ACA represents, is facing a great deal of uncertainty: How will our customers purchase and use our products? How are we going to organize ourselves in terms of teleworking? How will the economy and, for that matter, the stock market evolve? etc. My role, in this world of uncertainties, will be to organise discussion within the ACA and to find consensus in order to respond to these challenges. Then, together with Marc Hengen, the CEO of the ACA, I will act as spokesperson for these ideas to our governments and decision-makers.

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“The Luxembourg insurance market is set apart by the fact that it is largely internationally-oriented.”

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What is the share of the insurance sector in the Luxembourg economy?

 

Insurance is one of the historical pillars of the Luxembourg financial centre, along with banks and funds. The insurance sector, with 98 companies established in Luxembourg, employs over 4,000 people, a figure which, when taken together with their families, actually represents around 12,000 people. It is interesting to note that the number of employees working in the sector has more than doubled in 10 years. Over the same period, the value of the assets managed have tripled from 74 to 203 billion euros. This growth has strengthened the solvency of insurance companies. Local insurance represented 5% of the country's GDP in 2019. Finally, through the size of the new investments made each year, the insurance sector makes a significant contribution to financing the Luxembourg economy.

However, the impact of the insurance sector on the Luxembourg economy goes beyond the figures. For example, for a single climate incident, the tornado of August 2019, insurers paid out almost 65 billion euros for more than 4,000 damaged buildings and cars. In addition, the insurance and reinsurance sector has massively subscribed to government bonds to make a joint contribution to supporting the economy in the current health crisis. This role as a long-term investor in the country's economy is particularly important in the current context. Finally, from an economic, as well as a social, point of view, private insurance policies supplement the role of the State on the matter of social protection for health (complementary health plans) and retirement (pension contracts).

 

What challenges and opportunities do you identify for the insurance sector over the next five years?

 

The Luxembourg insurance market is set apart by the fact that it is largely internationally-oriented. In fact, 95% of premiums are underwritten outside our borders. However, in recent years, we feel that some countries have tended to close in on themselves, as if the adage "my country first" were the answer to all the ills that we are currently facing. The closing of borders that we have seen and the strategies at a national level alone in the fight against Covid-19 are just one more expression of this trend. For the ACA, and for each of its members, the top priority for the coming years will be to demonstrate the economic and societal added value of an open European insurance market and to defend the achievements of this single market tooth and nail. Alongside this political challenge, insurers will have to face the same challenges as many other economic sectors, namely digitalisation and its effects on our customers' consumption habits and our ways of working. Finally, for our Life insurance companies, two challenges that have already been a concern for them for several years will inevitably continue: an ageing population and low or even negative interest rates.