Delano: You were recently appointed Deputy CEO of Aca โ what challenges will this role entail?
: First of all, Aca's main mission is to defend and promote the industry. This involves navigating a complex and ever-changing regulatory environment, whilst ensuring compliance is respected, growth is ensured and the competitiveness of our sector (and, more broadly, the financial center as a whole) is maintained. set). One of our strengths and guarantee of our competitiveness has always been a constructive and collaborative approach with our regulator, who must remain vigilant about the appropriate balance between enforcing our regulatory framework and maintaining an environment that encourages entrepreneurship. By working closely, being aware of the economic and political environment around us and adopting innovative approaches, Aca management aims to continue to develop and maintain strong relationships with its members, partners and stakeholders, both nationally and internationally.
Furthermore, we must not forget that Aca is above all a great community made up of more than 1,900 professionals who share common values โโand who work together to promote, develop and advance the sector. To move forward together it is essential to maintain a certain degree of unity, federating and animating our community.
Aca's 2023 annual report mentions โcritical challengesโ related to corporate social responsibility (CSR). What's so challenging about it?
The challenges associated with corporate social responsibility are numerous. While each company must manage CSR internally, it is clear that ESG risks must also be managed.
Sustainable finance is one of the cornerstones of these ESG requirements. It is a priority for the Luxembourg financial sector, as well as for Aca, which proactively (to better support its members) has created specific working groups, such as the Sustainability Insurance Regulation Group and the Sustainability SFDR Group. While the first working group is responsible for deciphering new regulations in this area, such as the Corporate Sustainability Reporting Directive, the Corporate Sustainability Due Diligence Directive and the Sustainable Finance Disclosure Regulation, the second working group has The objective is to guarantee that our members have sufficient information and guidelines for their respective implementation.
It also refers to โ(over)regulation.โ Is there currently too much regulation? What regulations should be cut or modified in your view? And how would your goals be achieved otherwise?
Regulation is essential for the stability of the sector and the protection of policyholders. But, as with everything, care must be taken to ensure that quantity does not compromise quality. Too much regulation can hinder innovation and competitiveness. Aca advocates a balanced approach that promotes corporate responsibility while fostering an environment conducive to innovation and growth. In this context, we work daily with the various stakeholders at national and European level to maintain a dialogue and seek the right balance between regulatory requirements and an enabling environment for economic actors.
However, we see daily that the proliferation of regulations tends to produce the opposite effect to that desired. In the end, consumers find themselves drowning under a mountain of information required by regulations, while simpler, more easily digestible and controlled information would give them the necessary protection they seek. In this regard, I would like to quote the former Minister of Finance, Pierre Gramegna: "The entire directive, nothing more than the directive."
A Munich Re report in January estimated that natural disasters caused losses of about $250 billion worldwide in 2023. What is the insurance sector doing in the face of the climate crisis?
The essential role of insurance for society and the economy is to protect the assets of people and businesses, as well as provide for the future. In recent years we have seen an additional social role added: insurers and reinsurers have a decisive role to play in the fight against the climate crisis and natural disasters that affect us and pose a challenge to society as a whole. These natural disasters are becoming more numerous and frequent, and the final cost is constantly increasing. We have seen this locally with the 2019 tornado and the 2021 floods, which cost Luxembourg insurers almost โฌ250 million.
Our sector addresses these issues by focusing on three key areas: prevention, risk understanding and protection.
According to a fact sheet from the European Insurance and Occupational Pensions Authority, more than half (57%) of Luxembourg SMEs do not have any cyber insurance. Is this important?
I won't surprise you by saying that insurance coverage is obviously essential, especially for businesses considering the challenges they face. Cyber โโinsurance has become essential as cyber threats constantly evolve. As we saw earlier this year with numerous attacks on government websites, this emerging risk is now a reality. However, there is a paradox: the risk has never been higher, and yet demand for cyber insurance products is increasing modestly.
There are several possible explanations for this, but firstly I believe that the "safe" reflex does not yet exist when it comes to cyber threats; certainly not on the same level as insurance for your car, your home or even your holiday. Large business groups are very aware of cyber risk and are already implementing protective measures, which they continue to develop. SMEs, on the other hand, are being left behind. Of course, security comes at a cost, as does insurance, even if it involves threats that we may quickly find ourselves unable to address. In this context, insurers can play an important role: as with other products, insurance is there to repair the consequences of damage, from a financial point of view, but they are also attentive to the anticipation and prevention of the risk itself.
This article first appeared in from Delano magazine.
