Catherine Calleja, newly-elected president of the Malta Insurance Association, tells Anthony Manduca that the industry would like closer collaboration with the government on a number of issues.

Two major pieces of legislation affecting the insurance industry come into force next year and insurance companies are still awaiting feedback on their proposals as well as guidelines from the EU vis-à-vis these laws.

“Due to our EU membership there are a number of laws coming into force in 2018, the two major ones being the Insurance Distribution Directive (IDD), to be transposed in February 2018, and the General Data Protection Regulations (GDPR), which will be fully enforceable in May 2018.

“There are other aspects of local legislation or proposed legislation which also greatly affect our industry. We have been awaiting feedback on our proposals regarding some of these laws for some time,” Catherine Calleja, president of the Malta Insurance Association, says.

The IDD legislation will enable the issuing of a Conduct Book for the industry which will transpose the conduct of business provisions contained in the IDD, which is the responsibility of the MFSA’s Conduct Supervisory Unit. The same legislation will also necessitate the possible issue of new Insurance and Insurance Distribution Rules together with amendments to existing subsidiary legislation, i.e. rules and regulations issued under the Insurance Distribution Act and the Insurance Business Act.

“We have had several consultations on the Conduct Book, however we still have not been given the final version of this, which we were originally assured by the MFSA would be issued in June or July.

“The Conduct Book will have a number of rules that we and other industry players have to adhere to. We have heard that some of our suggestions have been favourably received, for example, our concern about having certain documentation having to be translated into Maltese which, besides increasing administration costs, may lead to conflict between translations.

“Complying with the substantial number of new conduct requirements will already be a burden that has to be shouldered by the relatively (compared to our European counterparts) small local insurers.

“There is also the worry that the directive imposes certain minimum harmoni­sing requirements but we are always concerned that local regulators might ‘gold-plate’ by adding extra requirements, and time is now of essence.

“The final version of the Conduct Book will also give us information on final requirements relating to the type of market research, product oversight and governance arrangements to be implemented, training requirements, the involvement of intermediaries and many others.”

As regards the GDPR, this is a new European law and deals with the next generation of data protection regulations.

“This is an important piece of legislation which regulates the processing of personal data within an increasingly online and international context. There are a number of issues insurers in particular are concerned about with regard to the GDPR, things like erasure and retention of data.”

Mrs Calleja says this legislation allows the Data Commissioner in Malta to issue guidelines for the industry.

“We are waiting for certain guidelines from the EU and have agreed with the Data Commissioner to collaborate to update the existing Insurance Guidelines on Data Protection. I would like to stress that in this new environment there are many challenges, including a huge amount of cyber risk, and insurers are working very hard to address them.”

Mrs Calleja describes the setting up of the Office of the Arbiter for Financial Services as “very positive”, further reducing the burden on the courts “and hopefully issues will be resolved faster, also the process facilitates mediation which is a helpful step”.

The law states that there has to be reasonable suspicion before breathalyser tests are carried out. This is the big question: what is reasonable suspicion?

However, the insurance industry does take issue with the proposed methods of financing the set-up. “We had ex­tremely cordial discussions with the chairman of the board of management, Geoffrey Bezzina, and we brought up a number of areas which we felt could be improved on. We feel there should be more of a burden on financial servi­ces providers who submit more complaints, as in the ‘polluter pays’ principle,” she says.

“Another issue is that it was proposed that we cede a percentage of our premium income to the Arbiter for Financial Services, which was not based on the classes of business where complaints could be made (business relating to individuals and micro-enterprises). We believe this to be wrong.”

Mrs Calleja says that while the aim of the legislation is to make it easy to resolve issues, making it compulsory for complaints to the Arbiter to be written only in Maltese has added a burden on the consumer, especially if one considers the number of EU nationals and third country nationals living in Malta. She says the industry would welcome feedback regarding its proposals from the Arbiter for Financial Services.

Another recent positive step by the government, she says, has been the incentivising of voluntary second pillar pensions, which was announced last week.  While the industry was expecting the allowances to be slightly higher, this is certainly a step in the right direction and something for which insurers have been lobbying for some time.

The industry has also been lobbying for tax incentives for health insurance, and Mrs Calleja referred to the government’s electoral pledge for these incentives. “We welcome this and would like to be involved in the discussions well before the legislation is out. We must stress that private health insurance helps alleviate the burden on public spending.”

Regarding public health and safety Mrs Calleja issues a warning about high-rise buildings.

“At the moment there are no specific pieces of legislation vis-à-vis health and safety covering high-rise buildings. Risks in­volved in high-rise construction are complex and significant. We intend to present definite proposals in this area and we believe our voice needs to be heard on this matter,” she says.

Another issue the insurance industry feels strongly about relates to a provision in a legal notice of 2013 called The Avoidance of Third Party Damages, which made it compulsory for developers to take out third party insurance for certain construction, demolition and excavation projects, and required insurers to carry out risk assessments and put the onus on them to issue an adequately valued insurance policy in the context of third party liability.

“It is the insurer’s job to assess the insurance risk, however it is the developer’s responsibility to ensure that the whole health and safety risk assessment is carried out and manage the risk on the site on an ongoing basis. Insurance is just one aspect of risk mitigation or transfer,” she says.

On the question of traffic management Mrs Calleja stresses the importance of enforcement and says the industry welcomes the extension of the existing points system to every driver on the road.

“We expected this to enter into force earlier but it hasn’t yet – we have heard rumours that the system is in the process of being implemented – yet the finer detail is still unknown to us. Apart from a points system, a strong deterrent which in­cludes a combination of fines, points and higher insurance premiums is needed to deter abusive driving practices and behaviour. We should also follow practices adopted abroad so that drivers, rather than vehicle owners, are penalised.”

She says that another change the insurance industry was supportive of, and which it lobbied for, was the lowering of the alcohol limit for drivers. The Malta Insurance Association has in the recent past also supported the Malta Police through a donation of portable breathalyser kits.

“Here, we must stress over and over again the importance of enforcement. The law states that there has to be reasonable suspicion before breathalyser tests are carried out. This is the big question: what is reasonable suspicion? I think that possibly most people leaving entertainment areas in the early hours of the morning may pose grounds for ‘reasonable suspicion’ and it would be not unreasonable to  regularly spot check a number of people exiting such spots.”

At the moment there are no specific pieces of legislation vis-à-vis health and safety covering high-rise buildings. Risks involved in high-rise construction are complex and significant

“We have seen a number of injuries and deaths on our roads – and things must change. We are here not just wearing our corporate hats, but as an important lobby group representing our clients. I feel very strongly about this. People I know have been killed, and we really need to have a debate on what constitutes ‘reasonable suspicion’.

“I am sure that many members of the public will be more supportive than the government thinks. This is not a political issue. We are all concerned about our children.”

Mrs Calleja says that the insurance industry has also been lobbying “for a few years now with different governments” to close a gap that local insurers are facing whereby they can still be exposed to huge claims by third country nationals.

“This needs to be given prio­rity. One claim on one local insurer can have an impact on every insurance payer in Malta,” she stresses.

She says there is a lack of coherence within the two sets of overlapping legislations that protect victims of traffic accidents. This, she points out, has in the past given rise to legal uncertainty, unnecessary litigation and court delays.

“We have repeatedly called on the government to support an initiative for the consolidation of these two legislative instruments and for the faithful transposition of European legislation in this area. The issues that require further re­view include policy cancellations, the automatic en­force­ment of non-EU judge­ments im­­posing a liability on a motorist or his in­surer, and the importance of insurers receiving pre-notice whenever local proceedings are initiated to enforce a foreign judgement.”

Insurers, she adds, remain extremely concerned about some aspects of the Equality Act that relate to age differentiation and other areas, “which seem to go beyond EU legislation”.

“The insurance industry has removed any trace of gender discrimination. However, this proposed Act, which has reached the First Reading in Parliament, is considered to go way beyond what the proposed directive states, which allows insurers to differentiate on the basis of risk.   Differentiation comes in various forms – introducing a minimum age for a driving licence is one form of differentiation.

“Risk is at the core of insurance business and it would be wrong and have a significant impact on insurance premiums if insurers cannot differentiate on the basis of risk. Although the MIA and several other associations were involved in the consultation process, the MIA awaits any developments in this regard.”

Mrs Calleja says the insurance industry very much wants to increase the visibility of insurance as a career.

“Our industry is no longer just concerned with compulsory mo­tor insurance. Over the past 15 years our industry has grown and diversified tremendously. We are writing an enormous amount of overseas and captive business – the premium volume we write overseas has surpassed local premium written; the spread and innovation in business classes has become extremely interesting, and the variety of jobs in the industry has really diversified.

“Today an insurance career has lots of scope for movement into new areas that were extremely limi­ted until relatively recently. Product development and innovation and new legislative requirements provide for increasingly challenging careers in both local and international business, as well as risk management and compliance, surveying and loss adjusting as well as insurance accounting. There is also more room for career development relatively quickly.

“We already sponsor an honours degree in our area – BA (Hons) in Insurance and Risk Management – and now have seve­ral Mcast apprenticeships, but we would like to see increased awareness of the breadth and richness of careers in our sector at secondary school level. We want a bridge built between the industry and guidance teachers.

“We would like to put insurance on the map for our young talented students when they are considering their first career choices,” she concludes.