Prime Minister Joseph Muscat announced that new synergies, legislation and training initiatives are in store for the insurance sector, to build on its recent growth. Dr Muscat described the insurance sector as a key asset for Malta, employing close to 1,000 insurance professionals and support staff, with business volumes steadily on the increase. Dr Muscat was addressing delegates during the The Insurance Europe Conference: "The Challenge Of Change: Global Insurance Trends".
Taking a look at the recent history and changes within this industry, Dr Muscat noted that Maltese firms who in the past used to provide insurance to the local market as agents of foreign, insurance companies have consolidated through a number of mergers and have started providing insurance underwriting services themselves.
These companies are now successfully established in the market and provide an invaluable service to the wider economy. Meanwhile they have been joined by some 50 new companies writing cross-border business as conventional or captive insurers and reinsurers - one of the clearest signs of single market integration in financial services.
The sector now has a total asset base of over Euro 10 billion and an annual premium income of close to Euro 2.5 billion. It continues to expand through an increasing number of protected cells as much as by the addition of new companies.
Access to the single market has also allowed Maltese insurance brokers to diversify their business, some of them by entering into the insurance management business through joint ventures with established international managers. The number of insurance management companies has now reached 15, with all the global players in the field having an established presence in Malta. A growing number of law firms, accountancy firms and other professional service providers have also specialised in insurance adding more value to our product and supporting the ongoing drive for innovation.
Not only has the insurance industry been able to face up to increased competitive pressures in the home market, noted the Prime Minister, but it has also become an integral part of the country's drive to continue making headway internationally. "My government recognises all this and is determined to maintain and strengthen the sector by promoting new synergies, legislation and training initiatives that will continue to sharpen its competitive edge."
Conscious of the challenges still faced by the European insurance industry, not least by the negative effects that the low growth environment is having on the demand for both life and non-life products, the Prime Minister explained that pledges to do its best to ensure that Malta will continue to offer the most competitive business environment possible for government, financial services and insurance companies in the region.
The tax treaty network which now comprises around 70 agreements will continue to be expanded while international financial corporations, international finance executives and high net worth individuals alike will continue to be encouraged through the right policies to base their interests in Malta.
More importantly in the current environment, "we will also continue to pursue tax policies that promote economic activity and an international level playing field. This is why we will continue to take a stand against the implementation of any form of financial transactions tax that may detract from the competitiveness of doing financial services business in Europe".
Innovation will also continue to be a key policy platform going forward. Malta remains the only EU member state with cell company legislation and continues to be a leader in the application of the Solvency II Directive to these types of structures.
"Just as they have done with the introduction of new frameworks for redomiciliation, insurance management, occupational and personal pensions and reinsurance special purpose vehicles, our legislators shall remain on constant lookout for further opportunities that would add to the versatility of our regulatory infrastructure".
Dr Joseph Muscat noted that Government is conscious of the challenges that the European insurance industry faces ranging-from a sluggish economy to the impact of low interest rates on profitability, from the lingering market uncertainties affecting long term asset portfolios to increasing competition from other financial products, from demographic patterns to climate change.
Malta strongly believes that these challenges can only be overcome through sound competitive polices that promote strong and sustainable growth. We will therefore actively promote and support the adoption of such policies within the EU.
"Our pledge to the insurance community is to continue to provide a stable and competitive environment within which it can continue to expand and develop new opportunities within the framework regulation provided by EU law. I assure you that un-der my watch Malta will continue to be a model of regulation, integration and opportunity and that it will continue to attract international capital, companies and leading professionals in your field. We are determined to keep the momentum going in the years to come."
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.