RegTech Know-How Series #4

RegTech Know-How Series #4

New Luxembourg rules on dormant accounts: key takeaways for life insurers, compliance challenges, and how digital tools can help

The publication of the Law of 30 March 2022 on inactive accounts, inactive safe boxes and dormant insurance contracts (Loi relative aux comptes inactifs, aux coffres-forts inactifs et aux contrats d’assurance en déshérence) brought some clarity to insurance professionals as to how they should handle their inactive contracts. The law, which will come into force on 1 June 2022, had been under discussion since 2018 and draws inspiration from existing frameworks in France and Belgium.

It will particularly affect the Luxembourg life insurance sector. In a 2021 survey, the Commissariat aux Assurances (CAA) had identified a total of 5510 dormant insurance contracts as of 31 December 2020, amounting to asset reserves of over 765 million euros.


We look at the context in which the law was implemented and the key points that life insurers need to consider, what challenges result from the law and how digital tools can help overcome them.

1. Context: lack of legal certainty for Luxembourg life insurers

Although, according to the CAA survey mentioned above, most life insurance companies already had existing or operational procedures for dealing with dormant contracts, there was no specific legislative framework in Luxembourg. This circumstance led to legal uncertainty. In particular, the assets consignation regime was not clear.

The difficulties for life insurers were amplified by two factors: first, the fact that France and Belgium already had existing frameworks on dormant insurance contracts, which lead to uncertainty amongst Luxembourg insurers as to whether they should take these into account for their French and Belgian clients; and second, Luxembourg’s professional secrecy obligations, which limited the ability of Luxembourg insurers to search for and contact beneficiaries.

Accordingly, the new law aims to create a Luxembourg framework that increases the protection of policyholders and beneficiaries while improving legal certainty for insurers in the Grand Duchy.

Good to know:

About one third of the existing dormant contracts identified by the CAA relate to policyholders resident in Luxembourg, with about two thirds located in other EEA countries (and a small proportion relating to contracts subscribed outside the EEA).

2. The law in a nutshell: key points for life insurers to be aware of

What are the main obligations for life insurance companies under the law?

In order to avoid inactivity in contracts (targeting both life insurance and capitalisation contracts), an important ongoing requirement for life insurers is to maintain regular contact with policyholders and closely monitor business relationships. This also serves to enhance the anti-money laundering and counter-terrorist financing (AML/CFT) framework, as dormant accounts can pose a greater risk.

In the event that a contract becomes inactive, the new law provides detailed obligations for the life insurance company to verify the status (alive or deceased) of the insured person and, in turn and if needed, search for and contact the beneficiaries. These obligations follow a specific chronology, and insurers should therefore update their procedures and policies accordingly.

Good to know:

Unlike in France (where insurers are obliged to check their database of insured persons annually with the Répertoire National d’Identification des Personnes Physiques (RNIPP) to find out about potential deaths), the new Luxembourg legal framework does not provide for a mandatory obligation to consult any registers in order to determine whether an insured person is still alive. In practice, however, this could be part of the measures insurers need to take in order to comply with their monitoring and research obligations going forward.

What are the relevant deadlines and procedures?

Example: Both of the following factors apply to a contract:

1) Benefit payable on the death of the insured person +

2) Indefinite end date of the contract or fixed date > 90th anniversary of the insured person

Good to know:

Initially, contact may be made by any means (e.g., email, text message, phone, etc.), but written confirmation by registered letter with acknowledgment of receipt is required.


The contact needs to be made with the insured person, not the policyholder (if the two are different). In most cases, this will be a new communication stream for the insurance company. The law provides that the insurance company should use any data and information available, but can also reach out to the policyholder to obtain contact details.

For all life insurance contracts, once the starting point of inactivity has been determined, the process is as follows:

* : Contact to inform about consequences of the contract becoming dormant: through any means, but must be confirmed by registered letter with acknowledgement receipt

** : Searches and related fees must be documented, and the costs of research must be proportionate to value of contract (stops if becomes too high).

Good to know:

The law softens professional secrecy obligations to enable life insurers to search for and contact beneficiaries where and when appropriate.

How will the consignation process work?

The new law clarifies the procedure for liquidating assets and handing them over to the Consignment Office (Caisse de Consignation) when a contract has been dormant for too long, as well as the restitution procedure (including by setting up a central electronic register of transferred assets to facilitate searches by potential beneficiaries).

Good to know: High level overview of a consignation request process

  1. Request submitted by life insurance company through an electronic deposit on a secure state platform (manual upload through myGuichet or via XML file deposit)
  2. Consignment office may request additional information
  3. Final decision from the Consignment Office within six months

What are the sanctions for non-compliance with the law?

The sanctions can be either administrative fines (up to 250.000 euros for individuals and 1 million euros for legal entities), which can be made public, or penal sanctions (from 12.500 to 1 million euros). The latter may apply both to the life insurance company itself and to its directors.

Good to know:

The Luxembourg legislator opted for sanctions that are less severe in financial terms than in France (where fines of up to 50 million euros have been imposed by the French regulator), but that can also be penal for some violations.

Next steps

The law will come into force on 1 June 2022. Some transitional measures will apply, particularly to contracts which have already been inactive for a long time, so that these contracts can be dealt with as a priority in accordance with the provisions of the law.

3. Compliance challenges stemming from the new law – and how digitalisation can help

As highlighted above, the new law brings clarity on how to handle inactive contracts.  However, it also creates new compliance challenges as professionals seek to align their internal processes with its specific obligations.  In the following, we take a look at some of the challenges insurance companies may face in practice and how digitalisation can help.

KYC Manager Use Case Example

KYC Manager is a Luxembourg-hosted compliance platform operated by Finologee that facilitates  the implementation and configuration of compliance-driven processes such as the dormant accounts regulatory framework. It is fully customisable to financial industry professionals’ needs and processes, allowing for multiple set-up options. Operated in a regulation-compliant ‘Support PFS’ setup on Finologee’s ISO/IEC 27001-certified hosting and operations infrastructure, it complies with EU and national IT outsourcing requirements that apply to the Luxembourg financial industry.

The following is an example of a use case for contacting and monitoring an insured person who has reached the age of 90, for which there has not been any recent contact:

  • Automatic notification when age criteria triggering obligations are fulfilled
  • Possibility to use KYC Manager to choose the most adapted contact channel(s) and automatically generate and send the communication to the insured person (email, SMS, regular paper letter, registered letter)
  • “Proof of life” can be given by clicking on a link in the SMS/email to the KYC Manager platform
  • Automatic follow-up reminders for ongoing monitoring

Good to know:

The above use case is just one example of the processes that could be set up with the KYC Manager product.

1) Monitoring contracts effectively to prevent inactivity


  • Setting up processes to prevent contract inactivity
  • Reinforce monitoring on ‘higher risks’ contract
How digitalisation can help:

  • Automation of contract monitoring by setting up alerts based on defined criteria (e.g., age of the insured person)
  • Configuration of digital interface to send notifications at certain intervals for “higher-risk” contracts

2) Meeting the deadlines of the law


  • Identify and respect each deadline (e.g. for contacting insured person, beneficiaries, etc.) whilst minimising time and resources spent
How digitalisation can help:

  • Configuration of automated alerts to ensure deadlines are not missed and avoid manual monitoring

3) Using the right contact channels to reach insured persons and beneficiaries, and tracing these contacts


  • Selecting the appropriate communication channel to reach the insured person and/or beneficiary
  • Tracing communications to ensure a trail of actions taken
How digitalisation can help:

  • Option to select different types of contact (SMS, mail, letter)
  • Communication can be created automatically based on a standardised template
  • Communication is tracked and recorded

Good to know:

#1 – Digital solutions can also help by giving the insured person the possibility to easily provide a ‘proof of life’ via digital channels, e.g., by clicking on a link in the sent email or SMS.

#2 – The role of the broker could be taken into account with the help of automated processes, as she/he is often in direct contact with the policyholder/insured.

4) Ensuring effective reporting to the CAA


  • Annual reporting of the number and value of dormant accounts to the CAA and the Administration des Contributions Directes (ACD)
How digitalisation can help:

  • Contract monitoring and classification is centralised
  • Easy export of the full list of dormant account and their value

5) Documentation and archiving of communications, searches and fees


  • Documentation of all measures carried out as well as all fees incurred through researches
How digitalisation can help:

  • Electronic tracking of contacts with insured persons
  • Search for beneficiaries and communication are archived

Having an easily accessible electronic archive is helpful for submitting a properly documented consignation request and following up on any additional requests for evidence from the Consignment Office. In addition, even after the consignation request is accepted, the insurance company will need to retain documentation for a set period of time, in particular so that any claim for restitution of the consigned assets can be dealt with properly.

Please get in touch with our team if you would like additional information about how Finologee’s KYC Manager product can help meet the obligations of the new law on inactive accounts, inactive safes and dormant insurance contracts, or a product demo: – (+352) 27 75 08-1 or contact us on