The emergence of Liechtenstein as an insurance location
The foundations and framework conditions for Liechtenstein as an insurance location were only created in the mid-1990s and only took off in the first decade of the new millennium.
Until the mid-1990s agencies of Swiss insurance companies had been the sole insurance organisations to be active in Liechtenstein, but the signing of the European Economic Area Agreement in 1995 sounded the starting shot for the establishment of a national insurance industry. Moreover, the passing of the Insurance Supervision Act in 1996 and the Insurance Supervision Ordinance in 1997 created EU-compliant legislation. Henceforth insurance companies were able to set up business in Liechtenstein and sell their products from the country to the whole of the EU. The Direct Insurance Agreement with Switzerland in 1997 also enabled insurance companies domiciled in Liechtenstein to enter the Swiss market.
Development of the insurance industry
As an insurance centre, Liechtenstein is unique in that it offers direct market access both to the EU and to Switzerland. At the same time, the country attaches enormous importance to the fact that it pursues an independent economic policy and preserves its locational advantages for the insurance industry. Liechtenstein’s liberal economic system offers insurance companies an ideal framework for developing innovative products and marketing strategies. On this basis insurance companies can sell insurance solutions from Liechtenstein and adapt them to the legislative systems of their specific target markets. The insurance companies market these strengths in a wide range of competitive products.
Life insurance companies sell various life insurance products from their bases in Liechtenstein. The products range from €30 capital redemption insurance policies to variable annuities right through to equity-linked life insurance. International pension funds have also set up business in Liechtenstein for the purpose of pension provision. Property insurers in Liechtenstein have become particularly specialised in providing cover in the case of major events and special risks, such as art insurance. In Liechtenstein, captives (i.e. in-house insurers of companies) also benefit from the country’s locational advantages and from its membership of two economic areas. From Liechtenstein, captives can insure the subsidiaries and branches of their parent companies both in Switzerland and throughout the EEA.
All insurance companies domiciled in Liechtenstein are supervised by Liechtenstein’s Financial Market Authority (FMA).
Outlook for the future
Secure, innovative and flexible insurance solutions tailored to meet the legislative and tax systems of a diverse array of target markets have contributed considerably to the success and to the growth of Liechtenstein as an insurance centre. The fact that Liechtenstein is a member of two economic areas, Switzerland and the EEA, its proximity to surrounding countries with the same language and access to Eastern Europe make the country an attractive location for starting and setting up insurance companies. The intention for the future is to build up and consolidate this strength.