How is authorisation granted?

A transparent and predictable authorisation process

Before applying, the CAA invites the prospective undertaking to present its project during a preliminary meeting – either in person or via videoconference – to discuss the proposed business plan, governance structure, and key assumptions. This early dialogue allows both parties to identify potential gaps and align expectations before a formal file is submitted.

Once the meeting has taken place, the application must include all documents listed in the annexes to the Circular, themselves reflecting the requirements set out in Articles 44 to 55 of the Insurance Sector Law (Loi modifiée du 7 décembre 2015 sur le secteur des assurances) and Articles 1 and 3 of CAA Regulation 15/03 (Règlement du Commissariat aux Assurances n°15/03 du 7 décembre 2015 relatif aux entreprises d’assurance et de reassurance). The regulator first verifies the completeness of the file and only then proceeds to a detailed assessment. Where information is missing, a single consolidated list of outstanding items is communicated to the applicant to promote a streamlined review.

Timing expectations are also clarified. For complete and non-complex files, the CAA generally aims to issue its decision within three to six months. However, applicants are expected to respond comprehensively to the CAA’s comments: a well-prepared and coordinated response can significantly shorten the overall assessment period.

A structured and digitalised submission model

Circular Letter 25/9 introduces a more harmonised and digitalised approach to the authorisation process. The CAA expressly favours fully electronic submissions – through its dedicated “CAA-FileShare” platform – which has become the standard channel for exchanges with applicants and their advisers. Such a shift is part of a broader effort to make interactions faster and more efficient.

Each application must follow a clearly structured format designed for traceability and consistency. Every document should bear a reference number corresponding to the annexes (for example “II.1_Shareholding_Structure” or “I.3_Group_Description”). Supporting documentation must be provided in searchable PDF format, while all numerical data and solvency projections must be submitted in Excel with embedded formulas to facilitate immediate verification by the regulator.

In the same spirit of efficiency, the CAA encourages applicants to submit all responses and supporting materials in a single, consolidated filing rather than through fragmented exchanges.

Finally, the Circular requires newly licensed undertakings to promptly communicate essential identifiers, including their registration number with the Registre de commerce et des sociétés, “Legal Entity Identifier”, and, where applicable, notifications under the outsourcing or electronic-signature circulars. These data support the CAA’s integration of each newly authorised captive or reinsurer into its supervisory system and the continuous monitoring of their activities from day one.

How are prudential standards applied?

A proportionate and pragmatic governance review

Circular Letter 25/9 reaffirms the principle of proportionality as a cornerstone of the CAA’s approach. While the same prudential standards apply to all undertakings, the regulator adjusts its expectations according to the nature, scale, and complexity of the risks underwritten. The CAA explicitly notes that “[…] proportionality may allow a certain flexibility with respect to governance requirements”, as further detailed in its dedicated circulars on the subject. In other words, smaller captives or reinsurers are not expected to implement the same governance arrangements as large, diversified groups.

Applicants should therefore propose a governance structure that is commensurate with their operations. The CAA’s review focuses on the competence, integrity and effective oversight of decision-makers, including directors, senior management and key function holders. Where one person holds multiple roles, conflicts of interest must be clearly managed and independence maintained.

Another central element of the CAA’s governance assessment concerns substance and effective presence in Luxembourg. In line with Article 51 of the Insurance Sector Law, every undertaking must have its central administration established in the Grand Duchy.

A comprehensive and risk-based assessment methodology

Building on its governance review, the CAA’s examination extends to the applicant’s entire prudential and operational framework. The depth of analysis varies according to the projected size and risk profile of the undertaking: the higher the complexity, the more detailed the scrutiny. For applicants, this means preparing a robust, data-driven submission supported by clear assumptions and realistic projections, often developed in collaboration with financial experts.

Beyond governance, the regulator’s assessment also covers the following main pillars:

  • General information: the economic rationale of the project, the group’s activities, the nature of the risks to be insured or reinsured, the adequacy of the retrocession programme, and the choice of the approved statutory auditor (réviseur d’entreprises agréé);
  • Shareholding structure: transparency, financial strength and integrity of shareholders, ensuring that ownership supports sound and prudent management; and
  • Business plan and solvency projections: notably, the coherence and realism of underlying assumptions and technical provisions, the soundness of stress-testing methodology, the adequacy of solvency capital requirements (SCR and MCR) and pricing, and the measures envisaged to restore the target solvency ratio under stress scenarios.

Circular Letter 25/9 further strengthens Luxembourg’s position as a pragmatic jurisdiction for captive and reinsurance undertakings. By clarifying its expectations and embracing digitalisation, the CAA has made the licensing journey both more robust and more rigorous from a documentation standpoint. Careful preparation and early engagement, supported by appropriate legal and financial guidance, remain essential to ensure a smooth review process and efficient interaction with the regulator. For groups considering Luxembourg as a domicile for a new captive or reinsurance vehicle, anticipating these requirements from the outset is the key to success.