, Issue No. 23 - July 2011.
Solvency II delay proposed
The Council of the European Union has proposed to delay the final Solvency II deadline until January 1, 2014. The proposal suggests that Solvency II's legal requirements for regulators should not be transposed into national law until March 31, 2013.
MIMA 2011 Survey Results
The Malta Insurance Management Association issued the results of its annual survey.
As at the end of last year, the insurance management industry was responsible for overseeing the operations of 11 pure affiliated or captive insurance companies, 30 third party writers for international groups, and 12 cells.
Total gross premium amounted to in excess of €1.25 billion, whereas total cash and investments balance for all entities under management now stands at €1.1 billion.
Entities under management paid €80 million in tax to local authorities, up from €45 million the previous year and from €20 million in 2008.
Malta Association of Retirement Scheme Practitioners Launched
The first meeting of the newly formed Malta Association of Retirement Scheme Practitioners was held on the 5th of July 2011 at 1600 hours at our offices in Old Bakery Street, Valletta.
The Association brings together those entities licensed by the MFSA to act as Retirement Scheme Administrators
(RSAs) in terms of the Special Funds (Regulation) Act 2002, and aims to safeguard the interests of licensed RSAs whilst promoting and enhancing expertise on retirement and pension products generally.
The Association is currently calling upon all Retirement Scheme Administrators to become members. Any interested persons should contact the Association's Secretary General, Dr. Matthew Brincat on email@example.com.
EU Insurance Guarantee Scheme
The European Commission is considering legislation to ensure that Insurance Guarantee Schemes (IGS) exist in all Member States. While a minimum protection on a European level is in place in the Banking and Securities sectors with the Deposit Guarantee Scheme (1994) and the Investor Compensation Scheme (1997), no such common European framework exists in the Insurance sector. The purpose of the IGS is to provide last-resort protection to consumers when insurance undertakings are unable to fulfil their contractual obligations in the event of a claim. Malta already has a Protection and Compensation Fund in place that fulfils a dual function: the payment of claims or commitments in Malta that remain unpaid if an insurer becomes insolvent and the payment of compensation for victims of road traffic accidents without insurance recovery.
In its White Paper the Commission advocates the establishment of an IGS in each Member State that covers both life and non-life insurance policies. Since covering all natural and legal persons might be excessively costly, the Commission favours criteria restricting claimants of the IGS to natural persons and small undertakings. Funding of the IGS by insurance undertakings should be determined according to their individual risk profiles and on the basis of ex-ante contributions. The Commission is expected to issue a legislative proposal on the EU IGS in the coming months.
European Commission urges Malta to encourage private pensions
On the 7th of June 2011, the European Commission published its recommendations for a Council Recommendation on the National Reform Programme for 2011 submitted by Malta.
Following its assessment of the National Reform Programme submitted by the Maltese Government earlier during the year, the Commission is encouraging action to ensure the sustainability of the pension system by accelerating the progressive increase in the retirement age and by linking it to life expectancy.
Moreover, the higher statutory retirement age should be accompanied by a comprehensive active ageing strategy. More importantly for pensions service providers, the use of early retirement schemes, used repeatedly in the past years, should be discouraged and private pension savings encouraged.
It is thought that such recommendations may lead to the much awaited reform in Malta's tax and social security regime which should prompt private pensions service providers to offer their products on the local market.
Insurance Mediation Directive 2 (IMD 2)
On the 27 Feb 2010, the EU Commission requested CEIOPS for advice for the review of IMD 1 which regulates the operation, establishment and freedom to provide services of EU insurance intermediaries. The EU Commission Consultation Document was published in November 2010 and the Commission following a consultation period is considering options with a view to issuing a legislative proposal in late 2011.
The main elements of the Commission proposals are a higher level of policy holder protection, the management of conflicts of interest and transparency, clearer provisions on the scope of the IMD, increased efficiency in cross-border business and a higher level of professional requirements.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.