MSV
Life
“Commonwealth Training Workshop on Banking and
Finance in Small States 11-19 April 2011.”
“The Insurance Market in Malta”
David G. Curmi ACII, Chartered Insurer
Chief Executive Officer
MSV Life p.l.c.
davidgc@msvlife.com
13 April 2010
MSV Life p.l.c.
MSV
Life
Primary Insurance Legislation
Insurance Providers
Providers
Insurance
Insurance
Insurance
Companies
Companies
Insurance
Insurance
Intermediaries
Intermediaries
Insurance
Insurance
Intermediaries
Intermediaries
Act(Cap
(Cap487)
487)
Act
InsuranceBusiness
Business
Insurance
Act(Cap
(Cap403
403) )
Act
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Subsidiary
Subsidiary
Legislation
Legislation
(Regulations)
(Regulations)
Subsidiary
Subsidiary
Legislation
Legislation
(Regulations)
(Regulations)
InsuranceRules
Rules
Insurance
InsuranceRules
Rules
Insurance
MSV Life p.l.c.
MSV
Life
Supporting Legislation
•
•
•
•
•
Data Protection Act
Professional Secrecy Act
Prevention of Money Laundering Act
Persons with Disability Act
Equality Act
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Life
Types of Insurance Providers
Typesof
ofInsurance
Insurance
Types
Providers
Providers
Insurance
Insurance
Companies
Companies
Reinsurance
Reinsurance
Companies
Companies
Insurance
Insurance
Intermediaries
Intermediaries
CaptiveCompanies
Companies
Captive
InsuranceBrokers
Brokers
Insurance
ProtectedCell
Cell
Protected
Companies(PCCs)
(PCCs)
Companies
InsuranceManagement
Management
Insurance
Companies
Companies
TiedInsurance
Insurance
Tied
Intermediaries
Intermediaries
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MSV
Life
Single Regulator for
Financial Services
• The Malta Financial Services Authority (MFSA).
• Single Regulator for banking, financial institutions,
insurance companies, investment services, securities,
stock exchanges and listing, trust management
companies and pension schemes.
• MFSA licences, regulates and supervises.
• MFSA is an autonomous, self-funded public institution.
• In Malta Insurance Legislation is based on European
insurance law and directives.
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MSV Life p.l.c.
MSV
Life
MFSA
Organization Chart
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Life
The Maltese Insurance - Key Facts
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MSV
Life
Insurance Principals Operating
in or from Malta
Insurance Principals
Number of
Licence
Holders
Protected Cell Companies
Insurance and Reinsurance Companies
Captive Insurance Companies
5
38
10
Total
53
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MSV Life p.l.c.
MSV
Life
Insurance Intermediaries
operating in Malta
Insurance Intermediaries
Insurance Agents
Insurance Managers
Insurance Brokers
Tied Insurance Intermediaries
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Number of Licence Holders
16
13
28
Over 400
MSV Life p.l.c.
MSV
Life
The Maltese Insurance Market
Gross Written Premiums
2007
Life Business
€265 million
Non –Life Business
€509 million
Total
€774 million
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Life
Maltese Insurance Companies
2004- 2009
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MSV
Life
Average Insurance Density in Europe
Health: €171
Non-Life: €523
Life: €1,097
Life
Non-Life
Health
The average per capita spend on Insurance in EU is €1,791
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MSV Life p.l.c.
MSV
Life
Malta Life Density
EU Average
€1,097
Malta
€467
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MSV
Life
Malta Non-Life Density
EU EU Average
Average
€1,097
€523
Malta
€467
Malta €250
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MSV Life p.l.c.
MSV
Life
Malta Health Insurance Density
EU Average
€171
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Malta
€25
MSV Life p.l.c.
MSV
Life
Malta Life Penetration
EU Average
5%
Malta
3.4%
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MSV Life p.l.c.
MSV
Life
Malta Non-Life Penetration
EU
Average
2.3%
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MSV Life p.l.c.
Malta
1.7%
MSV
Life
Malta Health Insurance Penetration
EU Average
0.8%
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Malta
MSV Life p.l.c.
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Life
Legislation and Regulation of
Insurance Business in Malta
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Life
Insurance Legislation
• Transposes the European Union Insurance and Reinsurance
rules and provides for passporting of services and establishment
in line with the EU single market concept.
• Reflects Malta’s international commitments, in particular the
WTO and provides a procedure for exchange of information
between the MFSA and foreign insurance regulatory authorities.
• Legislation creates a favourable regulatory and competitive
environment particularly in potential growth areas such as captive
insurance and insurance management companies carrying out
international business from Malta.
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Life
Authorization for Carrying on the
Business of Insurance (1)
Before granting an authorization the MFSA must be satisfied that:
• the company has made an application in writing on the prescribed
form.
• an application is to be determined by MFSA within 6 months of
receiving the required information but this period is reduced to 3
months where the authorization sought is restricted to reinsurance
or affiliated insurance.
• the company’s own funds are at all times appropriate for the type
of business to be carried on or being carried on by the company;
• the company’s objects are limited to business of insurance and
operations arising directly therefrom to the exclusion of other
commercial business.
• sufficient information is made available on persons having any
proprietary, financial or other interest in, or in connection with, the
company.
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Life
Authorization for Carrying on the
Business of Insurance (2)
Before granting an authorization the MFSA must be satisfied
that:
• a scheme of operations (Three Year Business Plan) has
been submitted.
• that the company discloses any close links that it may have
with any other person.
• New insurance companies shall not be authorised to carry
on long term business (life business) and general business
(i.e. new Composite Companies are no longer allowed).
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MSV Life p.l.c.
Ongoing Obligations
for Licence Holders
MSV
Life
•
•
Insurance licence holders to meet following criteria
on an ongoing basis:
a) Fit and proper criteria.
b) Sound and prudent management.
c) Financial soundness.
Other criteria:
- Own funds.
- Margin of Solvency.
- Technical Provisions.
- Minimum guarantee fund..
- Submission of annual audited accounts.
- Adherence to Prevention of Money Laundering
Act.
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MSV
Life
Required Own Funds
Type of Business
Own Funds
Long Term Business (Life Business)
€3,500,000
General Business
€3,500,000
General Business and Reinsurance
€3,200,000 to €3,500,000
Reinsurance Business
€5,000,000
Affiliated Insurance Companies
€2,300,000 to €3,500,000
Affiliated Reinsurance Companies
€1,000,000
Existing Composite Companies
€5,800,000 to €7,000,000
The required Own Funds of an Insurance Company must be unencumbered
at all times. The Regulator may request a ‘buffer’ (factor of 1.5) in case of start-ups over and
above these minimums
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Life
Components which Make up
Own Funds
• The paid up share capital of the company shall be equivalent to not
less than 50% of the value of the own funds of the company.
• Reserves other than reserves corresponding to the technical
provisions.
• Any profits or losses brought forward after deduction of dividends to
be paid.
• The remaining 50% can be a mixture of reserves, share capital
(including preference shares), subordinated loans and retained
profits provided that no more than 25% of which shall consist of
subordinated loans with a fixed maturity, or fixed term preferential
share capital and provided certain minimum criteria are met.
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Life
Accounts, Actuarial Investigation and
Financial Statements
• Financial year cannot be altered without prior approval of
Regulator.
• Within 6 months from closing of a financial year company
must:
a) forward to Regulator
b) publish in abridged form n two daily newspapers
c) exhibit in a conspicuous place
a copy of the audited financial statements.
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MSV
Life
Protected Cell Companies (PCCs)
• Modelled to a large extent on the provisions of the successful
Guernsey Protected Cell Companies Ordinance, 1997.
• Protected Cell Company provisions also apply to all insurance
companies, insurance managers and insurance brokers.
Key features:
• Segregation of Cellular Assets and Liabilities from Core and other
Cells.
• Lower capital requirements for Cells as they share capital with the
Core.
• Minimum Own Funds requirements apply to the PCC as a whole
not the Cell.
• ‘Secondary recourse’ to Core capital in case of insolvency of a
Cell.
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MSV
Life
Captive Insurance Companies
Captive Insurance Companies insurance company registered in Malta
whose business is restricted to insuring risks originating with
shareholders or connected undertakings or entities including:
•
•
•
•
Parent companies.
Associated or group companies.
Persons/entities with majority ownership or control in Captive
Company.
Risks of members of an association or of a particular trade.
industry or profession connected with their trade.
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MSV Life p.l.c.
Regulations for Captive
Companies
MSV
Life
Captive Insurance Regulations:
• Provide a regulatory framework tailor-made for such companies.
• Captives are exempt from a number of provisions of the Insurance Business Act.
Material Exemptions:
• Protection and Compensation Fund.
• Document Duty chargeable on contracts of insurance in so far as concerns
contracts relating to a risk situated outside Malta.
• Captives are exempt from the requirement to publish their accounts in the press.
Other notable features:
• Redomiciliation of companies carrying on affiliated insurance;
• Protected Cell Companies;
• Captives enjoy reduced application and supervisory fees;
• Captives enjoy a shorter statutory application processing time (3 months
maximum instead of 6 months).
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MSV
Life
Insurance Management Companies
Insurance Management Companies provide
Management services only to:
• Insurance companies
• Insurance brokers
May be authorised without having any appointment
Are obliged to create substance once they have four
appointments or a fee income level of €465,000,
(approx.) whichever is reached first.
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Life
Insurance Management Companies
Authorisation:
•
Written application (determined within 3 months).
•
Can provide all types of mediation services.
•
Professional Indemnity insurance
•
Own funds of:
a) Euro 12,500 – where appointment is restricted to a company
carrying on captive insurance business.
b) Euro 62,500 or 4% of premium receivable which ever is the
higher – where appointment is not restricted to management
of captive companies.
c) Euro 1,250– where company holds no appointment.
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MSV
Life
Appointment of Auditors
• Approved auditors must be appointed every year at AGM.
• Insurance auditors must hold the authorisation of the Regulator to
audit insurance companies.
• If company fails to appoint auditors Regulator has the right to
appoint and fix remuneration.
• Company must inform Regulator if auditors are changed.
• Auditors must inform Regulator if:
a) they resign (must specify reasons for resignation)
b) they do not seek to be reappointed
c) they decide to qualify the audit report.
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Life
Appointment of Actuaries
• Every Life Company must appoint an approved actuary.
• If the appointment of an actuary is terminated the Regulator
may request in writing reasons for termination directly from
actuary.
• Actuary must carry out Annual Statutory Actuarial Valuation.
• Within six months from end of financial year actuary must
send Actuarial Report to Report.
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MSV
Life
Failure to maintain the required
Margin of Solvency
Insurance companies must be solvent every day.
If the Margin of Solvency is less than that
required to be maintained at law:
a) The Regulator may require that the company shall not
assume any more business;
b) The Regulator shall restrict or prohibit the disposal of the
assets of the company.
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MSV
Life
General Supervision of Insurance
Companies
• Power of Regulator to acquire information.
• Power of Regulator to examine affairs of insurance
companies.
• Right of entry by Regulator to obtain information and
documents.
• Submission of prescribed Business Statements to
Regulator on an annual basis.
• Power of the Regulator to protect public interest.
• Power of Regulator to suspend or revoke authorisation.
• Power to regulate insurance advertisements.
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MSV
Life
Miscellaneous Supervisory Rules
• Criteria of Fitness and Properness of Directors,
Controllers, Senior Managers and Qualifying
Shareholders.
• Off-site supervision.
• Appointments and changes of Directors, Controllers or
Senior Managers.
• Consumer Protection and Complaints Procedure.
• Advertising guidelines.
• Information to policyholders.
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MSV Life p.l.c.
MSV
Life
Corporate Governance Guidelines for
Public Interest Companies
• Compulsory for Regulated Insurance Providers which
on their balance sheet date exceed the limits of two of
the following three criteria:
a) Balance Sheet Value of €2,500,000;
b) Turnover of €5,000,000;
c) Average Number of employees during the
period – 50.
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MSV Life p.l.c.
MSV
Life
Corporate Governance Guidelines for
Public Interest Companies
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Guideline 1 – The Board
Guideline 2 – The Chairman of the Board
Guideline 3 – Directors
Guideline 4 – The responsibilities of the Board
Guideline 5 – Board Meetings
Guideline 6 - Information and Professional Development
Guideline 7 – Relations with Shareholders
Guideline 8 – Conflicts of Interest
Guideline 9 – Corporate Social Responsibility
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MSV Life p.l.c.
MSV
Life
Recommended Web Site
www.mfsa.com
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MSV
Life
Thank you
davidgc@msvlife.com
Questions?
13 April 2010
MSV Life p.l.c.