Luxembourg's booming insurance sector: how the country has attracted Europe's leading players

Luxembourg's insurance sector has seen impressive growth over the past 25 years, with premiums more than doubling to €55 billion by the end of 2023 and total company assets increasing sevenfold. The rapid development of the free-standing life insurance market and the relocation of several large companies to Luxembourg after Brexit played an important role in this.

Along with the growth of the market, the number of employees has also increased: it has grown by 200% over the last 15 years, with more than 15,000 people working in the sector by the end of 2023. The emergence of new vacancies is linked to the need for highly skilled professionals due to the implementation of the European directive "Solvabilité II", which requires an increased level of regulatory control.

Luxembourg attracts insurance companies due to its diversified financial ecosystem, which includes high expertise in life insurance, casualty insurance and captive reinsurance (reinsurance within a group of companies). Among the key factors:

• A high level of investor protection, known as the "safety triangle".
• Flexibility in investments, allowing life insurance contracts to be customised to suit investors' objectives and classifications.
• Convenient geographical location in the centre of Europe, as well as political stability, which facilitates operations within the European single market.
• The effectiveness and competence of a national regulator that is responsive to the needs of the sector.

By continuing to develop at this pace, Luxembourg is well placed to consolidate its position as one of Europe's leading financial centres for insurance and reinsurance. However, the sector will have to adapt to new regulatory requirements, digitalisation and cyber risks, which are becoming increasingly relevant in today's world.

Luxembourg's experience demonstrates how the right combination of a favourable regulatory framework, investment flexibility and strategic geographical location can turn a small country into a financial giant. The insurance sector continues to attract international companies, confirming Luxembourg's status as a key player in the European insurance market.