LIECHTENSTEIN Trends and Developments Contributed by: Alexander Ospelt, Lukas-Florian Gilhofer, Vivianne Auer and Laura Bayer, Ospelt & Partner Attorneys at Law Ltd
Supervisory Prioritisation of “Value for Money” and Product Oversight Governance (POG) The Liechtenstein regulator – the Liechtenstein Finan- cial Market Authority (FMA) – explicitly lists “Value for Money” in its 2025 supervisory priorities for the insur- ance sector. This prioritisation appears to be part of a broader supervisory philosophy that seeks to ensure that insurance products offer genuine economic value, that policyholders are not exposed to unfair pricing structures, and that products deliver benefits that are proportionate to their cost. The FMA is to implement its value-for-money approach in its overall POG strat- egy. POG has been a high-ranking supervisory priority since it was first highlighted by the FMA as a trend in regulatory practice in 2022. In 2026, the FMA will also release new Guidance (FMA-M 2025/3) for insurance undertakings on its POG approach to focus on the value-for-money theme. There will therefore likely be a trend towards increasing supervisory activities in the area of POG. The FMA’s intentions are clear: to identify insurance products that do not provide sufficient value to poli- cyholders and to take “appropriate measures” to improve, reformulate, or potentially restrict such products. The FMA therefore places itself in line with the overall trend in Europe. Its annual reports and risk-priority papers emphasise that products show- ing persistent mismatches between premiums and benefits – such as those featuring very low claims ratios, limited coverage value, excessive charges, or disproportionate commission structures – will attract regulatory attention. New FMA-M 2025/3 Guidance The FMA-M 2025 Guidance is to be published in early 2026 and is aimed at supporting insurance undertak- ings in the development, testing, and monitoring of their products, contributing to regulatory compli- ance, and ensuring appropriate customer benefits. The Guidelines are based mainly upon European law POG stipulations and serve to promote the uniform and consistent application of regulatory requirements by insurance undertakings within the EEA. The main focus lies on the determination of appro- priate customer benefit, the consideration of critical aspects while developing insurance products, the
handling of conflicts of interest, and the supervision of distribution activities. Appropriate customer benefit As part of the product approval process, insurance undertakings are required to determine whether an insurance product delivers an appropriate level of customer benefit. This entails assessing whether the product is suitable for, and meets the needs of, the defined target market. Throughout its entire life cycle, the product must continue to align with the identified needs, objectives, and characteristics of that target market. Customer benefit is determined based on a holistic assessment of the product and its key features. In this context, the value of the product’s essential character- istics must be assessed in an appropriate and propor- tionate manner. While monetary aspects are a central consideration, non-monetary features that may be relevant to the target market may also be considered, including, for example, sustainability objectives, con- tractual flexibility, and ancillary services provided by the insurance undertaking. In the case of unit-linked life insurance products, par- ticular emphasis must be placed on the reasonable- ness of costs. Specifically, an appropriate balance must be maintained between the costs incurred by the insurance undertaking and the costs charged to the consumer. Higher costs must be justified by a demon- strable added value for the target market, reflected in corresponding product features or additional services. Depending on the needs, characteristics, and objec- tives of the target market, product testing must also take into account relevant external factors, such as the effects of inflation or the applicable tax framework. A favourable price–performance ratio for unit-linked products may be assumed where the costs and charges are proportionate to the benefits provided – namely investment performance, guarantees, insur- ance coverage, and services – when assessed from the perspective of the defined target market and in light of the costs borne by the provider. Insurance undertakings must be able to demonstrate the existence of a structured and transparent pric-
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