On 2 July 2024, the Commissariat aux Assurances (CAA) published Information Note 24/9 (Note) to present the results of its study on how life insurance undertakings incorporate sustainability.
Background
The study aimed to provide an overview of to what extent life insurance undertakings are currently committed to and involved with sustainability. It was carried out by reviewing the policies on the integration of sustainability risks in the investment decision-making process (Policies) published on a sample of websites of life insurance undertakings in accordance with the provisions of Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector, as amended (SFDR).
The Note specifies that the study did not seek to verify compliance with the provisions of SFDR, but rather to provide an overview of how Luxembourg life insurance undertakings integrate sustainability factors.
Key Takeaways
The Note (i) starts with a classification of life insurance undertakings depending on the extent to which sustainability is taken into consideration and (ii) lists a series of best practices that undertakings should implement.
Market classification
The CAA uses six criteria to classify life insurance undertakings into four groups, according to their level of maturity and commitment regarding the consideration of sustainability factors:
- Group 1: level of consideration for sustainability: not applicable
- Group 2: level of consideration for sustainability: limited
- Group 3: level of consideration for sustainability: low
- Group 4: level of consideration for sustainability: medium
Best practices
The Note identifies seven best practices that life insurance undertakings are to implement, which include:
- regularly updating the Policies;
- implementing group Policies;
- identifying in the Policies any sustainability factors that are not being considered;
- defining precisely the concept of integrating sustainability factors;
- specifying clearly in the Policies any absence of action with regard to the choice of underlying investments;
- improving access to information on sustainable finance regulations;
- complying with the disclosure requirements regarding principal adverse impacts of investment decisions on sustainability factors by 30 June of each year, in accordance with Article 4 of Commission Delegated Regulation (EU) 2022/1288 of 6 April 2022.
On this last point, the Note specifies that the CAA is extending the scope of its supervision regarding sustainable finance to these requirements and will soon contact life insurance undertakings on this matter.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.