LIECHTENSTEIN Law and Practice Contributed by: Christian Inmann and Markus Stelzl, Inmann Stelzl & Partner Attorneys at Law Partnership
8. Insurtech 8.1 Underwriting Processes
Participants providing liquidity in a principal capacity are not required to be licensed or registered as mar - ket makers. Regulatory obligations focus instead on the authorisation and conduct of CASPs, particularly trading platform operators, who must ensure fair and orderly trading. 7.3 Regulatory Distinction Between Funds and Dealers While regulations do not distinguish between funds and dealers engaged in high-frequency and algorith - mic trading, different regulations are applicable to dealers (investment firms) and funds engaging in such activities, even if the strategies are similar. • Dealers trading on own account are regulated under MiFID II and must be authorised as invest - ment firms. • Funds, in contrast, are regulated under AIFMD or UCITS, with supervision focused on the fund man - ager rather than the fund itself. Similarities include adherence to market abuse rules, operational and model risk management, and expec - tations of robust algorithm governance. The key dis - tinction lies in who trades and why: dealers trade as market participants; funds trade on behalf of inves - tors. 7.4 Regulation of Programmers and Programming In Liechtenstein, programmers who develop trading algorithms or electronic trading tools are generally not directly regulated. Regulatory obligations attach to the firms deploying the tools, not the individuals writing the code. However, independent developers may become regu - lated if their services include execution, order routing or trading advice. Simply supplying software without control over trad - ing decisions remains unregulated, but the client firm of the programmer remains liable for regulatory com - pliance.
In the insurtech sector, underwriting processes increasingly rely on digital and automated tools, including: • AI-driven risk assessment; • real-time pricing engines; • IoT and third-party data integration; and • rule-based workflows mostly supplemented by human oversight. Regulation does not prescribe specific methodologies, but imposes constraints on their use. Underwriting must comply, in particular, with consumer protection and transparency rules, data protection laws such as GDPR, and Liechtenstein-specific insurance regula - tions overseen by the FMA. 8.2 Treatment of Different Types of Insurance Different types of insurance are treated differently by both industry participants and regulators. • Life insurance and annuities, as long-term con - tracts, rely on underwriting models based on mor - tality, longevity and health data, and are subject to stringent Solvency II and FMA requirements on capital, liability valuation and long-term risk man - agement. • Non-life insurance, such as property and casualty insurance, in contrast, involves shorter-term, event- driven risks and uses probabilistic and catastrophe models; regulatory focus is on reserving, claims management, and capital for volatility and cata - strophic events. While the overall regulatory framework, including the national Liechtenstein Insurance Contract Act, applies to all insurers, practices and requirements are tailored to the duration, nature and volatility of the underlying risks.
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