What is the purpose of the Law?

Law 12/2017, of June 22, on the regulation and supervision of insurance and reinsurance of the Principality of Andorra aims to establish the regulatory and supervisory framework of the insurance and reinsurance market of the Principality of Andorra, with the purpose of ensuring transparency, promoting orderly development, and safeguarding the rights of policyholders, insured persons and beneficiaries.

In particular, this Law sets out the conditions for access to and exercise of the activity, the applicable regime regarding supervision and solvency, and also regulates the recovery and liquidation of insurance and reinsurance entities domiciled in the Principality of Andorra.

Back

Which entities are subject to this Law?

The following entities are subject to this Law:

• Insurance and reinsurance entities with registered office in the Principality of Andorra.
• Groups of insurance and reinsurance entities, provided that all entities, or at least the parent entity, have their registered office in the Principality of Andorra.
• Insurance and reinsurance entities with registered office outside the Principality of Andorra that carry out their activity in the territory of the Principality.

Also subject to this Law are:

• Natural or legal persons who, under any title, exercise the effective management of the entities indicated in the preceding sections and, in particular, the members of their administrative bodies.
• General directors, managers and other persons who, under the authority of the respective administrative bodies, hold senior management positions or functions in the entities indicated in the preceding sections.
• Natural or legal persons responsible for the branches of insurance entities in the Principality of Andorra with registered office outside the Principality.
• Natural or legal persons to whom insurance or reinsurance entities have outsourced functions in accordance with the provisions of this Law.
• Natural or legal persons who, with prior authorization from the Insurance and Reinsurance Supervisory Authority, accept the performance of the functions provided for in this Law or in regulatory provisions.
• Natural persons designated to permanently or stably represent legal persons exercising any of the positions or functions indicated in the preceding sections.
• Any other natural or legal person in relation to whom this Law establishes any effect or legal consequence.

Back

Which is the regulatory and supervisory body?

The Andorran Financial Authority (AFA) carries out the functions of supervision and control of the insurance and reinsurance market of the Principality of Andorra.

The AFA is a public law entity with its own legal personality and assets. It has full legal capacity and independence from the General Administration to carry out the functions of supervision and control of the financial, insurance and reinsurance system of the Principality of Andorra, as well as the other functions granted to it by this Law.

Back

What is needed to operate in Andorra?

This section shows some of the main requirements to carry out this activity in Andorra:

• Authorization granted by the Andorran Financial Authority (AFA).
• Legal form of a Public Limited Company duly registered in the Register of Commercial Companies of the Principality of Andorra or, if domiciled abroad, having a representative in the Principality and being duly registered in the Register of Commercial Companies.
• A minimum capital, fully subscribed, of:
  000 € in general for insurance entities.
  000,000 € for reinsurance entities.
• They must prove that they have eligible basic own funds to adequately cover the Solvency Capital Requirement and the Minimum Capital Requirement.
• Insurance and reinsurance entities, as well as branches, must comply with the special accounting regulations established for entities in this sector in accordance with the provisions of the first provision of this Law and, subsidiarily, with the general accounting regulations in accordance with Law 30/2007, of December 20, on business accounting, with the financial year coinciding with the calendar year.
• For accounting purposes, they must establish and maintain sufficient technical provisions at all times for all their activities. For these purposes, such provisions must be adequately calculated and accounted for.
• For transparency purposes, these entities must have a freely accessible website showing separately the corporate section and the section aimed at clients and the general public.
• They must publicly report on their website an annual report on their financial and solvency situation under the terms determined in the regulation, as well as updates if new circumstances arise that significantly affect the information contained in the last report published.
• More information on the Law on the regulation and supervision of insurance and reinsurance is available on the AFA website.

Back