Insurance Regulation & Legislation

Insurance businesses operating in Malta benefit from EU legislation and regulation, in addition to the country’s tailor-made regulatory measures that have increased the attractiveness of the domicile. Malta is the only EU member state with enacted Protected Cell Company (PCC) and Incorporated Cell Company (ICC) legislation, which makes it one of the most advantageous locations for insurance activities.

The Regulator

The Malta Financial Services Authority (MFSA) is the single regulator for all financial services in Malta. The MFSA aims to meet the needs of insurance business, but also applies a rigorous due diligence process and takes a firm approach in regulating the industry. The authority is accessible to professionals and companies seeking to discuss solutions for their insurance needs and encourages regular consultation sessions throughout the licensing process of a potential insurance business, to ensure the company meets all regulatory standards.

Legal Framework

The insurance industry in Malta is regulated by two separate, but complementary laws:

  • Insurance Business Act: Provides for the authorisation and supervision of insurance companies by the MFSA
  • Insurance Intermediaries Act: Governs insurance agents, insurance brokers, insurance managers and tied insurance intermediaries

Malta’s legislation provides for:

  • Captives (Affiliated Insurance Companies)
  • Protected Cell Companies (PCCs)
  • Incorporated Cell Companies (ICCs)
  • Reinsurers and insurance intermediaries
  • Securitisation Cell Companies (SCCs)

Re-Domiciliation

An insurance company or an insurance management company established in another jurisdiction may continue in Malta under certain conditions and does not need to wind up in the country of its incorporation. Maltese law allows foreign entities to re-domicile their business in Malta, if:

  • The entity is formed and registered in an approved jurisdiction (including EU, EEA and OECD states as well as most offshore centres)
  • The entity is similar in nature to a company under Maltese law
  • The laws of the country of incorporation allow re-domiciliation
  • The constitutive documents of the entity allow re-domiciliation
  • The entity is not in the process of dissolution or winding up

Application Procedure

Insurance companies, Captives, Protected Cell Companies (PCC), Incorporated Cell Companies (ICC) and cells in a PCC or ICC are required to apply for authorisation with the regulator, the Malta Financial Services Authority (MFSA). The application process follows the same pattern for all forms of insurance related companies.

The first step would normally include a preliminary discussion on the outline plan proposed by the prospective applicant. The insurance licence application consists of a formal application form which has to be submitted together with all other documentation required by the Act. A due diligence exercise is carried out on shareholders, directors and senior management of the company or the cell to determine they are fit and proper persons. A detailed business plan or scheme of operations of the insurer’s proposed business also has to be submitted with the application in order for the MFSA to assess the feasibility of the proposal.

The scheme of operations

  • should describe the business model and strategy
  • should include target markets and marketing plan
  • should include financial projections and resources
  • should describe the investment strategy
  • should describe personnel and internal controls
  • should include information on reinsurance or retrocession
  • should include agreements with third parties

The statutory maximum period for processing is six months for insurance companies, while a reduced period of three months applies to protected cells, affiliated insurance companies and reinsurance companies.