LIECHTENSTEIN Law and Practice Contributed by: Alexander Ospelt, Lukas-Florian Gilhofer, Vivianne Auer and Laura Bayer, Ospelt & Partner Attorneys at Law Ltd
11. Emerging Risks and New Products 11.1 Emerging Risks Affecting the Insurance Market Cyber-Attacks and ICT/Third-Party Operational Risk Due to the use of AI, cyber-attacks have gradually become more powerful, more scaled, more sophisti- cated, more precise, faster, and therefore harder for cybersecurity to detect or block. Cyber-attacks can therefore be included in emerging risks for the insurance market, with the financial sec- tor – Liechtenstein’s most important business sector – being a key target. Incidents can damage business continuity and cause mass claims (eg, for business interruption). Beyond cyber-attacks, other ICT-related incidents can compromise the security of network and information systems, adversely affecting the availabil- ity, authenticity, integrity, or confidentiality of data. The Crowdstrike Falcon case in summer 2024 highlighted how events such as faulty updates can also lead to extensive disruptions and restrictions. ICT-related incidents can pose threats to individual companies and jeopardise the stability of the entire financial system. Trends such as decentralised work arrange- ments, digital business models and the adoption of cloud computing further exacerbate these risks. Against this backdrop, management of ICT third- party risk is increasingly critical. The implementation of the Digital Operational Resilience Act (DORA) in the Principality of Liechtenstein in 2025 highlights the growing significance of these issues. DORA not only encompasses comprehensive regulations for ICT risk management, handling of ICT-related incidents, testing digital operational resilience and managing ICT third-party risk, but also expands the regulator’s supervisory tools. The FMA is now equipped with sharper supervisory powers – ie, the ability to demand reporting, run audits, impose sanctions or corrective measures and require contingency planning – which helps safeguard the stability and integrity of the finan- cial sector against cyberthreats and ICT disruptions. 11.2 New Products or Alternative Solutions From the perspective of the insurer, new policy types have been developed in respect of emerging risks,
These rules ensure that insurers can recover funds while respecting the rights and obligations of the poli- cyholder and any contractual limitations.
10. Insurtech 10.1 Insurtech Developments
In the Principality of Liechtenstein, the domestic mar- ket is small. Liechtenstein has a small population and limited domestic “retail demand”, so insurers’ efforts will need to target cross-border/high-net-worth/niche clients. “Insurtech” has proven to be key to facilitating retail activities, and refers to the use of modern technol- ogy in the insurance business. Examples are digital brokers, online sales and data-driven underwrit- ing. Insurtech been a particularly important driver of innovation, with new actors entering or preparing to enter the market, as well as established market participants breaking new ground. We expect AI to accelerate the speed of these developments. Market participants benefit from the regulator’s proactive and open approach, as well as from the FMA’s consider- able experience in this field. 10.2 Regulatory Response The FMA has set up an own department a dedicated “FinTech Unit/Regulatory Laboratory” to help both tra- ditional financial firms and new fintech/insurtech com- panies to launch and operate, suggesting a regulatory environment geared toward innovation and flexibility. Additionally, it is worth mentioning that Liechtenstein supports innovation via what is called the “innovation framework” – including legal forms, friendly corporate- law options (foundations, protected-cell companies, “venture cooperative” LVC), and institutional support (innovation clubs, regulatory sandbox-type environ- ment). By doing so Liechtenstein lowers the barriers to establishing financial (including insurance) innova- tion ventures.
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