Malta’s growing insurance manager community wrote a gross premium for entities under management amounting to €1.2 billion for the year ended December 31, 2010, double the previous year’s figure.
According to a combined results survey just compiled by the Malta Insurance Management Association, entities under management paid €80 million in tax to local authorities, up from €45 million the previous year and from €20 million in 2008.
As at the end of last year, the managers – which, according to MIMA, include all the important global names – were responsible for overseeing the operations of 11 pure affiliated or captive insurance companies, 30 third party writers for international groups, and 12 cells.
Total cash and investments balance for all entities under management now stand at €1.1 billion.
Local regulations stipulate that insurance companies must submit their business statements to the Malta Financial Services Authority by June 30.
“Insurance management in Malta is a growing market,” MIMA chairman John Tortell told The Sunday Times. “The jurisdiction enjoys a consistently solid reputation and clients hear more about Malta. The insurance companies, including the larger ones like BMW and Vodafone, have also expanded, so Malta sees both organic and external growth.”
Mr Tortell said the revenue injected into the government’s coffers by the industry is generated by just 112 people – such is the low labour-intensity of the sector – but MIMA, in particular, is keen to attract more talent to insurance management. Around 90 of the 112 professionals are Maltese.
The talent pool is gaining newer, younger recruits who are more knowledgeable in insurance accounting while the management companies engage in in-house training and secondment. Similar endeavours by companies with a wider reach, coupled with a heightened drive to lure more students to the industry, would ensure there is less head hunting across Malta’s wider insurance industry, he said.
The insurance management industry’s growth and attractiveness, Mr Tortell emphasised, could not merely be pinned on the jurisdiction’s tax-efficient regime.
“The tax regime is an added benefit,” Mr Tortell explained. “But the main advantage of domiciling an insurance company in Malta is the Freedom of Services rule that allows local companies to write insurance business directly in all EU jurisdictions. An insurance company domiciled outside the EU is able to write captive business within the EU by establishing a ‘fronter’ company between the captive and the client.
“That freedom of doing business is probably the main reason why these companies are moving to Malta. The critical mass came after 2004 when the jurisdiction turned onshore. Besides, Malta also boasts the EU’s only protected cell company legislation framework.”
Malta’s advantages over competitor jurisdictions Ireland and Luxembourg continue to be lower costs, easy access to the regulator, highly skilled workforce, language, and legal provisions allowing continuation of business and speed to market.
Additionally, Mr Tortell pointed out, the domiciliation of the all-important names in Malta has given the jurisdiction a crucial seal of approval. It is a feature which aides marketing initiatives undertaken by the Finance Ministry and Finance Malta, the agency tasked with showcasing the jurisdiction overseas.
It also gives independent professionals like lawyers and service providers constantly travelling to meet potential clients more clout to wield as they sell Malta.
The growing cluster around the insurance management industry also continues to profit. Estimated financial benefits derived by the local services industry – banks, law firms, auditors, and the like – as a result of managed company activities as well as those of the manager exceeded €7.1 million last year. The figure is more than double that of 2008.
Significantly, there are other important spill-overs from the industry. Visiting clients, prospective clients, and related parties spent 1,250 hotel nights in Malta in 2010.
Mr Tortell said MIMA was confident more business will be brought to Malta and a similar momentum to that of the last few months can be sustained. Not only is there a market within the EU which is drastically underdeveloped, he said, but there is also potential across other regions like the US and Asia.
The implementation of the Solvency II directive next year will help contribute to the jurisdiction’s growth from outside the bloc.
Under the directive, non-EU domiciled companies operating within the EU would be better equipped if they are to have their insurance activities domiciled in the bloc to be able to write business in Europe.