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

On 22 December 2022, the Commissariat aux Assurances (the CAA) released Round Letter 22/22 on the takeover of intermediation in specific sorts of life coverage contracts (Round 22/22).

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

1. Scope of software

Circular 22/22 applies to coverage brokers and insurance agents mandated by quite a few lifetime insurance companies not belonging to the same group (In-Scope Intermediaries), when the In-Scope Intermediary requires about the intermediation of “personal savings and other investments” or “bearer” contracts.

The round defines “discounts and other investments” contracts as solitary, standard or variable premium daily life insurance plan insurance policies, normally aiming to supply price savings and investment flexibility, which permit surrenders and transfers (e.g. a unit-linked life insurance policies plan with rates exceeding the tax deduction). “Bearer contracts” are outlined as life insurance policies guidelines which, irrespective of their other traits, aid anonymity for the policyholder and/or beneficiaries.

The round also sets out the adhering to non-exhaustive checklist of cases when a takeover could arise:

The policyholder grants a brokerage mandate to a broker other than the a single who acted as insurance intermediary when the lifestyle insurance plan coverage was underwritten.
The policyholder grants a brokerage mandate to a broker for a lifestyle insurance policy coverage that was marketed straight by the insurance policy endeavor or through a single of its agents.
The policyholder helps make a ask for to replace the broker performing as an insurance plan middleman on the existence insurance policy plan with an agent, and vice versa.
An insurance intermediary transfers distribution pursuits on 1 or much more lifetime insurance guidelines to yet another intermediary.
An insurance policies endeavor transfers to an insurance policy middleman the distribution of just one or a lot more daily life coverage insurance policies that had formerly been marketed specifically.

The circular also stresses that the steerage it includes is without prejudice to the AML/CFT rules typically applicable to the entities concerned.

2. Vital criteria

Circular 22/22 focuses on three regions exactly where In-Scope Intermediaries should really undertake the subsequent ideal procedures when getting above an coverage agreement.

In-Scope Intermediaries are predicted to have interior strategies that present for conditions exactly where they choose over an insurance policy agreement.

In-Scope Intermediaries are expected to consider account of the affect of having above intermediation in their AML/CFT overall risk evaluation, as perfectly as in their AML/CFT coverage and techniques.

With regards to AML/CFT guidelines, Influenced Intermediaries need to carry out an personal evaluation at shopper level, getting into account in distinct:

The ability of the outgoing distributor as a 3rd-party introducer in the indicating of the Luxembourg AML/CFT principles.
The AML/CFT guidelines and processes of the outgoing distributor.
How the insurance plan policy was distributed by the outgoing distributor.
The money invested in the insurance policies coverage as first, periodic or variable rates in advance of the takeover of intermediation, like their financial and geographical origin.
Any adjustments in the parties to the insurance policies policy that occurred in advance of the takeover.
Any improvements with regards to the circumstance of the consumer right before the takeover (e.g. transform of domicile, modify of professional action).
Any substantial functions less than or variations to the contract just before the takeover (e.g. partial surrenders, advertisement hoc payments or alterations to the beneficiary clause).

In-Scope Intermediaries should then apply ideal mitigating steps, together with, in unique, the gathering and evaluation of supplementary files and information.

Circular 22/22 provides a checklist of information and paperwork that In-Scope Intermediaries must collect when having in excess of the intermediation of a deal.

In-Scope Intermediaries are then expected to utilize the legal obligations relating to the rules of carry out on the basis of the info they have collected. The CAA expects specific attention to be paid to opportunity conflicts of desire.

3. Timeline

Round 22/22 has been applicable because 1 January 2023.

To browse the Circular Letter (French only), simply click below_