Andorra committee finalises new insurance contract law, revises sanctions

The parliamentary Finance and Budget committee has finalised a new insurance and reinsurance contract law for Andorra that changes the sector’s sanctions regime and will go to the plenary on Thursday. The measure complements existing insurance supervision rules and aims to align contracts with European standards, improve client information and increase transparency.

Under the approved text, the new law will enter into force one year after its publication in the Official Bulletin of the Principality of Andorra (BOPA). Insurers will then have a further two years to adapt existing contracts to the new rules; the reduced transition period replaces an earlier five‑year timetable. Firms must inform clients of changes using a communication format to be approved by the Andorran Financial Authority (AFA).

The committee increased the fixed fine ranges that apply specifically under the new contract law. Penalties for infringements originally proposed at €500–1,500 (minor), €1,501–4,000 (serious) and €4,001–10,000 (very serious) were raised to €2,500–6,000, €6,001–12,000 and €12,001–50,000 respectively.

The law also revises the broader sectoral sanction regime. For very serious infringements the monetary fine will be set at 1.5% of net turnover, with a new minimum of €50,001 (previously the minimum was €240,001 under the current law). For serious infringements the sanction will be 1% of net turnover with a minimum of €25,001, and for minor infringements 0.75% with a minimum of €5,000. In all categories the rules introduce the option to impose fines on natural persons when misconduct is deliberate or negligent; for very serious cases such individual fines may range from €50,001 to €100,000.

Overall, the changes raise some penal ranges while reducing the statutory minimums for company fines in other cases, so the reform will mean higher penalties in some scenarios and lower minimums in others. The committee says the adjustments refine the original government proposal but do not alter the project’s main objectives. The new sanctions regime will not take effect until the specified entry‑into‑force period elapses, so it will only apply from 2027 onward.