MFSA Chairman Prof Joe Bannister was interviewed by Captive Review for this month's edition of the insurance publication on the challenges facing international insurance programmes and about how Malta has developed as an attractive jurisdiction to operate in.
Questioned on the most significant challenges facing the industry, the MFSA Chairman highlighted the introduction of Solvency II in January II, explaining that the Solvency II framework promotes a strong risk culture which needs to become embedded in the insurers' organisation and nurtures strong risk management capabilities - two elements that are key for the effective operation of any global risk management programme. However, it is positive, Prof Bannister noted, that some captive managers have focused on turning these challenges into opportunities for the optimisation of global insurance programmes.
The interview also discussed the impact of worldwide regulatory developments, which will be having a significant impact on the role of captive managers in the years ahead. On this subject, Prof Bannister highlights the need for risk-based supervision with risk-based capital requirements, stronger emphasis on good governance and risk management and improvements in public disclosure.
In this context, he recalled the EU - US dialogue which aims to reintroduce the mutual understanding of the solvency regimes on both sides of the Atlantic, to promote more effective supervision: "The cross - border activity of international insurance programmes needs a global system that helps open markets and free capital flows. This is a challenge that needs to be factored in by captive managers when tailoring their captive".
The interview also focuses on Malta's attractiveness as a jurisdiction for captives. Prof Bannister noted that "upon joining the EU, Malta recognised there was a need for companies to start migrating into the EU. It was this recognition that led to the launch of the re-domiciliation programme. This programme was utilised frequently when it was conceived and it is still used occasionally now. The redomiciliation programme allows companies to relocate without having to wind-down or go through similar costly procedures".
The MFSA Chairman also discussed the introduction of the protected cell company and the development of the concept through the special purpose vehicle and the re-insurance special purpose vehicle which have led to risk transfer and securitisation. "We have also developed securitisation vehicles, where we have introduced the cell concept. The cell company gives better clarity and ring-fencing that compartments, where you have crossover."
In conclusion, Prof Bannister stated that the Authority will maintain its willingness to interact with companies: "the law is the law, but in developing regulations, we have been communicating with the industry. We are always happy to sit down to discuss with the operators what their requirements are" concluded Professor Bannister.
The full interview is available on: http://goo.gl/09oLut
MFSA Newsletter – October 2015
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