Takeover of intermediation in life insurance – new CAA Circular Letter 22/22

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The CAA Circular Letter 22/22 provides guidelines on issues that may arise in the context of a takeover of insurance intermediation.

On 22 December 2022, the Commissariat aux Assurances (the CAA) released Circular Letter 22/22 on the takeover of intermediation in certain types of life insurance contracts (Circular 22/22).

This circular provides guidelines on issues that may arise in the context of a takeover of insurance intermediation (reprise d’intermédiation).

1. Scope of application

Circular 22/22 applies to insurance brokers and insurance agents mandated by several life insurance companies not belonging to the same group (In-Scope Intermediaries), whenever the In-Scope Intermediary takes over the intermediation of “savings and other investments” or “bearer” contracts.

The circular defines “savings and other investments” contracts as single, regular or variable premium life insurance policies, typically aiming to provide savings and investment flexibility, which permit surrenders and transfers (e.g. a unit-linked life insurance policy with premiums exceeding the tax deduction). “Bearer contracts” are defined as life insurance policies which, regardless of their other characteristics, facilitate anonymity for the policyholder and/or beneficiaries.

The circular also sets out the following non-exhaustive list of situations when a takeover may occur:

The circular also stresses that the guidance it contains is without prejudice to the AML/CFT rules generally applicable to the entities concerned.

2. Key considerations

Circular 22/22 focuses on three areas where In-Scope Intermediaries should adopt the following best practices when taking over an insurance contract.

In-Scope Intermediaries are expected to have internal procedures that provide for situations where they take over an insurance contract.

In-Scope Intermediaries are expected to take account of the impact of taking over intermediation in their AML/CFT overall risk assessment, as well as in their AML/CFT policy and procedures.

With regards to AML/CFT policies, Affected Intermediaries should perform an individual assessment at customer level, taking into account in particular:

In-Scope Intermediaries should then apply appropriate mitigating measures, including, in particular, the gathering and assessment of supplementary documents and information.

Circular 22/22 provides a list of information and documents that In-Scope Intermediaries should collect when taking over the intermediation of a contract.

In-Scope Intermediaries are then required to apply the legal obligations relating to the rules of conduct on the basis of the information they have gathered. The CAA expects particular attention to be paid to potential conflicts of interest.

3. Timeline

Circular 22/22 has been applicable since 1 January 2023.

To read the Circular Letter (French only), click here_

 

Contact our experts Charles Cahoua, Pierre-Michaël de Waersegger and Emmanuelle Mousel to help you implement this new circular.

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Luxembourg Newsflash – Takeover of intermediation in life insurance – new CAA Circular Letter 2222

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