Malta Insurance Rendezvous 2009

The 2nd Malta Insurance Rendezvous was held on the 4th and 5th March at the Westin Dragonara Resort in Malta with a participation of over 180 delegates. The packed schedule provided tailored sessions, practical case studies and interactive discussion opportunities and also provided great networking opportunities.

Delivering a key note speech at the start of the conference, MFSA Chairman, Prof. Joe Bannister put the Maltese insurance market in the context of the current international market environment. He mentioned that ‘with the global financial system at an historical turning point, predicting the future is a challenge, not only from a long-term perspective, but sometime from a near-term perspective as well – as the recent financial crisis has demonstrated’. Prof. Bannister added that ‘…. in Malta (we) have been relatively shielded from the global crisis. Our banking is strong due to the fact that our institutions maintain a strong balance sheet.

Whatever the current conditions, the MFSA Chairman stated, ‘the Authority remains mindful of the developing needs of business. Regulations on Special Purpose Vehicles are currently being drafted as also regulations for Incorporated Cell Companies. Both regulations will hopefully be available for consultation in the coming months’.

Among various topics of current interest, the conference provided the opportunity for participants to discuss Solvency II. The European Captive Insurance and Reinsurance Owners’ Association (ECIROA) said that captive insurance company owners will face increased costs as a result of the Solvency II directive. Many captive owners may not be able to afford to establish large working groups necessary to address issued raised by Solvency II.

Director General of the European insurance and reinsurance federation (CEA) Dr Michaela Koller, in her intervention, replied that the federation is not in favour of exemptions for captives on the basis of their legal status. Koller indicated that the CEA preferred dealing with the needs of captives through the proportionality principle under Solvency II instead. Dr Marisa Attard, Insurance Business Director at the MFSA, stressed the point that all insurers were ultimately responsible for their solvency, even if they outsourced actuarial functions.

The two day conference tackled various aspects of insurance business including protected cell companies, captives and securitisation, taxation, climate and catastrophe risk, the credit crunch and global policies. Malta Country Report – The 4th Quantitative Impact Study (QIS4) In order to harmonise and strengthen the European supervisory framework, the European Commission has issued a directive proposal for a modern risk-based supervisory framework for the supervision of European (re)insurance companies called ‘Solvency II’.

The Solvency II Framework Directive proposal was published by the Commission on 10 July 2007. Following the publication of the proposal, a work plan has been agreed between the Commission and the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) covering the development and adoption of Level 2 implementing measures and future work to be done on Solvency II.

The framework will, following current plans, be implemented in 2012. As part of the Solvency II project, the Commission has requested that CEIOPS run a number of large scale field-testing exercises, called Quantitative Impact Studies (QIS), to assess the practicability, implications and possible impact of the different alternatives considered.

The fourth Quantitative Impact Study (QIS 4) on Solvency II was run by CEIOPS from April to July 2008. Operational arrangements to conduct QIS 4 and collate results from insurance undertakings were made by national insurance supervisors separately in each member state, supplemented by a centrally-coordinated collation of groups’ results. Results collated at national level were then shared within CEIOPS, which produced an overall CEIOPS QIS4 report which is available on CEIOPS’ website: http://www.ceiops.eu/media/files/consultations/QIS/CEIOPS-SEC-82-08%20QIS4%20Report.pdf.

The Malta report summarizes the finding of the Malta QIS4 study. This report aims to be factual, reporting the feedback received from Maltese insurance undertakings that participated in QIS4. The Malta response was considerably higher than that for the previous QIS3 study.

The MFSA received 16 completed spreadsheets from individual insurance undertakings, comprising 5 insurance undertakings carrying out life business and 14 insurance undertakings carrying out non-life business. These participants were all classified as small insurance undertakings, the criteria being that gross written premiums do not exceed EUR100million in the case of non-life business and the gross technical provisions do not exceed EUR1,000 million in the case of life business (defined by CEIOPS).

The Malta report is available on the MFSA website www.mfsa.com.mt under publications & events / reports and publications. MFSA Consultations

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