After numerous postponements, it now seems that Solvency II, the EU Directive that harmonises EU insurance regulation, will be adopted on January 1, 2016. Primarily this concerns the amount of capital that EU insurance companies must hold to reduce the risk of insolvency.

The MIA said that most local insurers were well prepared, both in terms of how strong they were financially, as well as for the reporting that will be required.

At the moment, guidelines are being issued by the European Insurance and Occupational Pensions Authority, via the MFSA, to help them.

“What is of a concern to Insurance Europe and to ourselves is that these guidelines and regulations are putting a lot of strain on insurance companies because there is a lot of reporting to do,” MIA director general Adrian Galea said.

“There are no allowances for our size and we have to do practically all that insurance companies in Europe do.”

Middlesea’s president and CEO Alfredo Munoz believes the effort will pay off if it is approached with the right frame of mind.

“Implementation of Solvency II is one of the major tasks the Maltese insurance sector has to face in the short to medium term. From an operational perspective, it will be a challenge and will demand huge efforts and employment of resources with an impact on the margins of our companies, already under stress.

“But it could also be an ­opportunity to improve the management of our entities, whose stakeholders will benefit from more accurate solvency modelling, enhanced governance and risk monitoring. The role of supervisors is key to ensure that our focus stays on ­customer needs and regulation will not be an excessive and formal burden,” he said.