Word Definition

Any form of marketing or communication to the public by an authorized insurance

Advertisement
undertaking promoting a service or product, excluding a prospectus.
As per Article 22 (5) an approved actuary is a person who -
(a) does not hold a role or perform a function on behalf of the undertaking
which could give rise to a significant conflict of interest;
(b) is a Fellow of an Institute of Actuaries, or a Fellow of a Faculty of Actuaries,
or holds actuarial qualifications of similar standing of an institute of repute
Approved Actuary
recognised for such purposes by the competent authority and has the
required skill and holds appropriate practical experience to perform his
functions as an actuary;
(c) and holds the competent authority’s approval to act as actuary to perform
the with-profits actuary function as set out in article 23.
As per Article 21(10), an approved auditor shall be a person who is qualified to be
an auditor in accordance with the Companies Act and holds the authorisation of
Approved Auditor
the competent authority issued to him in accordance with regulations made for the
purpose of this article.
Authorisation Approval or permission granted under the Act to conduct insurance business.
Authorised Insurance An entity authorized to carry on direct general or long-term insurance business,
Undertaking including reinsurance.
Authorised Reinsurance
An entity authorized to conduct reinsurance business.
Undertaking
Body Corporate Any entity having a distinct legal personality, including foreign corporations.
Premises of an authorized insurance or reinsurance undertaking, excluding the
Branch
head office, where insurance business is conducted.
Activities related to the execution and fulfilment of insurance contracts, which fall
Business of Insurance within specific classes of long-term or general business specified in the Second
Schedule and Part I of the Third Schedule.
an authorised insurance undertaking, owned either by a financial undertaking,
other than an insurance or reinsurance undertaking or a group of insurance or
Captive Insurance reinsurance undertakings within the meaning of article 2, or by a non-financial
Undertaking undertaking, the purpose of which is to provide insurance cover exclusively for the
risks of the undertaking or undertakings to which it belongs or of an undertaking or
undertakings of the group of which it is a member;
an authorised reinsurance undertaking, owned either by a financial undertaking,
other than an insurance or reinsurance undertaking or a group of
Captive Reinsurance insurance or reinsurance undertakings within the meaning of article 2, or by a non-
Undertaking financial undertaking, the purpose of which is to provide reinsurance cover
exclusively for the risks of the undertaking or undertakings to which it belongs or of
an undertaking or undertakings of the group of which it is a member;
a cell created by a cell company for the purpose of segregating and protecting the
cellular assets of the company in the manner provided by these regulations and
Cell includes a reference to segregated accounts, compartments or units within a
company having multiple accounts, compartments or units, by whatever name
designated, and the word "cellular" shall be interpreted and applied accordingly;
a company formed or constituted as such or converted into a cell company and
Cell Company
creating within itself one or more cells for the purposes of segregating and

1
 Word Definition
protecting the cellular assets of the company in accordance with the provisions of
these regulations, and in relation to the conduct of shipping or aviation business as
defined in article 84E of the Companies Act;
A situation where natural or legal persons are linked by control or participation or
Close Links
permanently linked to the same person by a control relationship.
Represented by specific classes of long-term business listed in the Second
Commitment
Schedule
Competent Authority The Malta Financial Services Authority (MFSA)
Rules related to business conduct issued by the competent authority under the Act
Conduct of Business Rules
or its regulations.
An agreement where an insurer agrees with the insured, for consideration, to pay a
Contract of Insurance
sum of money on the happening of a specified event involving uncertainty.
The relationship between a parent undertaking and a subsidiary or any other
Control
natural or legal person and an undertaking.
A person exercising the power to determine the financial and operating policies of
Controller
a body corporate.
Country of the Country where the policyholder resides or where the contract's related
Commitment establishment is situated for legal persons.
An individual in a position similar to a director, carrying out similar functions in
Director
directing an undertaking.
Includes information recorded in any form and production of information in legible
Document
form.
EEA State A State that is a contracting party to the European Economic Area Agreement.
EIOPA The European Insurance and Occupational Pensions Authority.
Head office or any branches of an authorized insurance or reinsurance
Establishment
undertaking.
An undertaking in an EEA State, not Malta, engaged in direct insurance activities
European Insurance
within the meaning of Article 2 of the Solvency II Directive, which has received
Undertaking
authorisation in accordance with Article 14 of the Solvency II Directive
European Regulatory A supervisory authority in an EEA State or Member State empowered to supervise
Authority insurance or reinsurance undertakings as per Article 13 of the Solvency II Directive
An undertaking in an EEA State, not Malta, engaged in reinsurance activities within
European Reinsurance
the meaning of Article 2 of the Solvency II Directive, which has received
Undertaking
authorisation in accordance with Article 14 of the Solvency II Directive
Authorization for an insurance or reinsurance undertaking to establish a branch or
European Right
provide services in another EEA State under certain conditions.
European Systemic Risk A board overseeing the European Union's financial system's macro-prudential
Board aspects.
Financial Undertaking Entities such as credit institutions, insurance undertakings, investment firms, etc.
Business of insurance of any of the classes specified in Part I of the Third
General Business
Schedule.
A collection of undertakings meeting specific criteria: (a) It comprises a
Group
participating undertaking, its subsidiaries, entities in which these subsidiaries hold

2
 Word Definition
a participation, and linked undertakings as defined in Article 22 of Directive
2013/34/EU. (b) It can also be formed through strong and sustainable financial
relationships among these undertakings, including mutual associations. Key
criteria include one undertaking exercising dominant influence over financial
decisions, subject to centralised coordination, and the requirement for approval by
the group supervisor as per Title III of the Solvency II Directive. The undertaking
with centralised coordination is considered the parent undertaking, while the
others are subsidiaries."
A body related to insurance against civil liability regarding the use of motor
Guarantee Fund
vehicles and the enforcement of the obligation to insure against such liability;
As per the definition of parent company in the Companies Act:
(i) Holds a majority of voting rights in another undertaking, known as a subsidiary.
(ii) Has the authority to appoint or remove a majority of the board members or
administrators of another undertaking, while being a member of that undertaking.
(iii) Wields significant influence over an undertaking, typically through a
Holding Company contractual agreement, provision in the memorandum or articles of association of
the subsidiary. (iv) Controls alone, through an agreement with other members, a
majority of voting rights in another undertaking. (v) Holds a participating interest in
another undertaking and has the power to exert or actually exercises significant
control or management over that subsidiary undertaking, operating together with it
on a unified basis."
A person appointed by the competent authority to act as an inspector under the
Inspector
Act, as per Article 30(1)
Insurance Agent An enrolled person under the Insurance Distribution Act.
Insurance Manager An enrolled person under the Insurance Distribution Act.
Rules related to insurance business issued by the competent authority under the
Insurance Rules
Act.
The party to whom a sum of money or consideration is payable under an insurance
Insured
contract.
The party to an insurance contract agreeing to pay a sum of money upon a
Insurer
specified event.
Lloyd’s The society and corporation incorporated by the Lloyd’s Act (1871)
Business as defined in Article 5(1) in the Act, means business of insurance of any
Long Term Business
of the classes specified in the Second Schedule
Minister The government official responsible for financial services regulation.
Money Laundering As defined in the Prevention of Money Laundering Act.
Motor Vehicle As defined in the Motor Vehicle Insurance Ordinance.
Officer Individuals with specific roles in an undertaking.
Contractual arrangements where a service provider performs activities for an
Outsourcing
insurance undertaking.
Own Funds As defined in MFSA Insurance Rules
Participation Ownership or control representing a specific percentage in an undertaking.
Participating Undertaking An undertaking holding a participation or linked to other undertakings as specified.
Policy The document evidencing an insurance contract.

3
 Word Definition
Policyholder The legal holder of an insurance policy.
Premium Consideration paid by an insured under an insurance contract.
Prescribed Set forth by regulations under the Act.
Qualifying Shareholding Direct or indirect ownership in an undertaking representing a specific percentage.
Accepting risks ceded by insurance or reinsurance undertakings or providing cover
Reinsurance
to such institutions.
A market authorized under the Financial Markets Act or fulfilling specific criteria in
Regulated Market
other regions.
Regulation (EU) No
Regulation establishing EIOPA.
1094/2010
Relevant Person Natural or legal person or group of persons carrying out specified activities.
A document related to an undertaking's financial situation or compliance with
Report
regulations.
Risk Exposure to potential damage, liability, loss, or another negative occurrence.
Risks related to property or vehicles in Malta or risks related to residents or
Risk Situated in Malta
establishments in Malta.
Risk Situated Outside Risks not located within Malta or not involving Maltese property, residents, or
Malta establishments.
Schedule The schedules attached to the Act or specific regulations.
Secretary An individual responsible for company administration.
Shareholder An individual or institution owning shares in an undertaking.
Short-Term Business Business as defined in the Act.
Supervision Oversight by the competent authority of insurance business operations.
Third Country Branch A branch situated outside the European Union or EEA State.
Third Country Insurance An undertaking situated outside the European Union or EEA State engaged in
Undertaking insurance activities.
Third Country Reinsurance An undertaking situated outside the European Union or EEA State engaged in
Undertaking reinsurance activities.
An entity engaged in insurance or reinsurance business, including legal entities
Undertaking
and groups.
Value Date The date of the underlying transaction for financial assets or liabilities.
Written Communication Communication in a physical or electronic form that can be reproduced in writing.

Part II of the Insurance Business Act in Malta:

Article 3 - Competent Authority

• It is the duty of the competent authority to enforce regulations and ensure compliance by
insurance and reinsurance undertakings with the Act's provisions, regulations, Insurance
Rules, Conduct of Business Rules, and directives issued by the competent authority.

Article 4 - Powers and Duties of the Competent Authority

4
 • The competent authority focuses on protecting insured persons, policyholders,
beneficiaries, and the public, maintaining Malta's reputation, and promoting
competition.

• It aligns supervisory tools and practices with the Solvency II Directive, involving
participation in EIOPA activities, compliance with EIOPA guidelines, and ensuring
national mandates do not hinder its duties.

• The competent authority can create, modify, or revoke Insurance Rules and Conduct of
Business Rules to enforce the Act's provisions and implement EIOPA's guidelines under
the Solvency II Directive.

• These rules are binding on authorized insurance and reinsurance undertakings and others
as specified.

Part III - Authorisation for Carrying on Business of Insurance

Article 5 - Classification of Business of Insurance and Ancillary Risks:

• Defines business of insurance as long-term or general in accordance with schedules 2

and 3:

No Class Description of class of long-term insurance

Contracts of insurance on human life or contracts to pay annuities on human life
I Life and annuity but excluding (in each case) contracts within Classes II and III of this Schedule.
Marriage and Contracts of insurance to provide a sum on marriage or on the birth of a child,
II birth being contracts expressed to be in effect for a period of more than one year.
Contracts of insurance on human life or contracts to pay annuities on human life
where the benefits are wholly or partly to be determined by reference to the
Linked long value of, or the income from, property of any description or fluctuations in their
III term value.
Contracts of insurance providing specified benefits against risks of
Permanent incapacitation due to injury as a result of an accident or sickness, lasting for a
IV health period of not less than five years or until the normal retirement age.
Contracts providing for operations where associations of subscribers are set up
to capitalize their contributions jointly and subsequently distribute accumulated
V Tontines assets among survivors or beneficiaries of the deceased.
Contracts providing for capital redemption operations based on actuarial
Capital calculations, involving commitments of specified duration and amount in return
VI redemption for advance payments.
Contracts to manage the investments of pension funds or combined contracts
VII Pension fund of insurance covering conservation of capital or payment of a minimum interest.
Collective
VIII insurance Contracts of a kind referred to in Article 2(3)(b)(v) of the Solvency II Directive.
Social
IX insurance Contracts of a kind referred to in Article 2(3)(c) of the Solvency II Directive.

5
No Class Subcategories for General Business

(a) fixed pecuniary benefits; (b) benefits in the nature of indemnity; (c) combination
1 Accident
of the two; (d) injury to passengers.

(a) fixed pecuniary benefits; (b) benefits in the nature of indemnity; (c) combination
2 Sickness
of the two.

Land vehicles (other

All damage to or loss of: (a) land motor vehicles; (b) land vehicles other than motor
3 than railway rolling
vehicles.
stock)

4 Railway rolling stock All damage to or loss of railway rolling stock.

5 Aircraft All damage to or loss of aircraft.

Ships (sea, lake and

6 river and canal All damage to or loss of: (a) river and canal vessels; (b) lake vessels; (c) sea vessels.
vessels)

All damage to or loss of goods in transit, or baggage, irrespective of the form of

7 Goods in transit
transport.

All damage to or loss of property (other than property included in classes 3, 4, 5, 6,

Fire and natural
8 and 7) due to: (a) fire; (b) explosion; (c) storm; (d) natural forces other than storm;
forces
(e) nuclear energy; (f) land subsidence.

All damage to or loss of property (other than property included in classes 3, 4, 5, 6,

Other damage to
9 and 7) due to hail or frost, and any event such as theft, other than those falling
property
within class 8.

All liability arising out of the use of motor vehicles operating on the land (including
10 Motor vehicle liability
carrier’s liability).

11 Aircraft liability All liability arising out of the use of aircraft (including carrier’s liability).

All liability arising out of the use of ships, vessels, or boats on the sea, lakes, rivers,
12 Liability for ships
or canals (including carrier’s liability).

13 General liability All liability other than those falling within classes 10, 11, and 12.

(a) insolvency (general); (b) export credit; (c) instalment credit; (d) mortgages; (e)
14 Credit
agricultural credit.

15 Suretyship (a) suretyship (direct); (b) suretyship (indirect).

Miscellaneous (a) employment risks; (b) insufficiency of income (general); (c) bad weather; (d) loss
16 of benefits; (e) continuing general expenses; (f) unforeseen trading expenses; (g)
financial loss
loss of market value; (h) loss of rent or revenue; (i) indirect trading losses other than

6
No Class Subcategories for General Business

those specified above; (j) other financial loss (non-trading); (k) other financial loss
(not specified in (j) above).

17 Legal expenses Legal expenses (including costs of litigation).

(a) assistance for persons who get into difficulties while traveling, while away from
18 Assistance home, or while away from their habitual residence; (b) assistance in other
circumstances.

• Permits authorization for principal risk, extending to ancillary risks connected to it if

specific criteria are met.

• Details exceptions for certain risks, such as legal expenses insurance, which may be
considered ancillary under specific conditions.

Article 6 - Restrictions and Requirements for Carrying on Business of Insurance:

• Authorization for Insurance Business: No individual or entity is allowed to conduct

insurance business in or from Malta without proper authorization from the competent
authority.

• Exemption for European Undertaking: European insurance and reinsurance entities

operating in Malta under European rights are exempt from the authorization requirement.

• Regulatory Powers of the Minister: The Minister, upon the advice of the competent
authority, holds the power to create regulations on matter of insurance and reinsurance.

• Authority in Determining Insurance Business: If there is any uncertainty regarding

whether an activity falls within the scope of insurance business in Malta or if insurance
business is being conducted, The MFSA has the final say in determining this matter.

Article 7 - Authorization for Carrying on Business of Insurance

• Empowers the competent authority to grant permission for specific classes of insurance
business in or from Malta.

• Mandates compliance with various conditions, including information disclosure,

financial capability demonstration, and adherence to governance regulations.

• Allows the competent authority to impose specific conditions upon authorization.

Article 8 - Authorization Requirements:

• The competent authority can issue authorization under Article 7 only if certain conditions
are met:
• Properly written application in the specified format.
• Clear delineation of an undertaking's objectives aligned with intended business
scope (insurance or reinsurance).
• Disclosure of information related to interests, identities of shareholders, and their
holdings.

7
 • Assurance of the suitability of all involved parties managing the insurance
business.
• Submission of a satisfactory scheme of operations, meeting criteria set by
Insurance Rules.
• Possession of eligible basic own funds to cover Minimum and Solvency Capital
Requirements, complying with governance systems.
• Extension Requirements: Undertakings seeking to expand insurance business classes
or risks must submit a scheme of operations and proof of possessing eligible own funds
to meet capital requirements.
• Close Links Consideration: The competent authority will not issue authorization if close
links hinder effective supervision or if laws in other countries prevent effective
supervision due to difficulties in enforcement.
• Continuous Compliance Monitoring: To ensure compliance with restrictions due to
close links, authorized insurance and reinsurance undertakings must continuously
provide necessary information for monitoring.

Article 9 - Combination of Long-Term Business and General Business

• Generally, restricts undertakings from simultaneously conducting long-term and general

insurance business unless granted specific authorization. It also offers exceptions
allowing cross-authorization based on the type of insurance undertaken.

Article 10 - Applicants with Head Office in Malta

• Details the requirements for authorization for undertakings headquartered in Malta,

including provisions for opening branches or appointing representatives in Malta or
abroad.

Article 11 - Applicants with Head Office Outside Malta

• Imposes stringent requirements on third-country insurance undertakings seeking

authorization, including maintaining branches and representatives in Malta, meeting
financial obligations, and complying with governance standards.

Article 12 - General Representatives

• Specifies the stringent requirements and limitations for the general representative of an
undertaking in Malta, including their roles, responsibilities, and liabilities.

Part IV - Conditions for Carrying on Business of Insurance

Article 14 - Own Funds of Authorized Insurance and Reinsurance Undertakings:

• Specifies that an undertaking's own funds include basic and ancillary components.

• Requires prior written approval from the competent authority for considering ancillary
own fund items in the calculation of own funds.

• Empowers the competent authority to issue Insurance Rules defining basic and ancillary
own funds, surplus funds, fund classification into tiers, and eligibility criteria for own
funds.

Article 15 - Solvency Capital Requirement

8
 • Mandates undertakings to maintain eligible own funds to cover the Solvency Capital
Requirement.

• Allows calculation of the Solvency Capital Requirement using a standard formula or

internal model, as per Section 5.5 of Chapter 5 (Part B) of the MFSA Insurance Rules.

• Provides provisions for using internal models if the standard formula does not suit the risk
profile, based on competent authority decision and reasons.

Article 16 - Non-Compliance with Solvency Capital Requirement

• Requires immediate notification to the competent authority if an undertaking fails to

comply with the Solvency Capital Requirement.

• Demands submission of a realistic recovery plan within two months of non-compliance

observation.

• Empowers the competent authority to require necessary measures for compliance within
specified periods and may restrict asset disposal in exceptional cases.

Article 17 - Minimum Capital Requirement

• Imposes the obligation for undertakings to maintain eligible basic own funds covering the
Minimum Capital Requirement.

• Specifies calculation methods for the Minimum Capital Requirement, as per Section 5.6
of Chapter 5 (Part B) of the MFSA Insurance Rules.

Article 18 - Non-Compliance with Minimum Capital Requirement

• Mandates immediate notification to the competent authority upon non-compliance

observation.

• Requires submission of a short-term realistic finance scheme for approval within one
month of non-compliance observation.

• Empowers the competent authority to restrict asset disposal and communicate these
measures to relevant regulatory authorities.

Article 18A - Recovery Plan and Finance Scheme: The specifics for these plans, required under
articles 16 and 18, are determined by Insurance Rules.

Article 18B - Identification and Notification Procedures: Authorized insurance or reinsurance

undertakings must use early warning indicators to spot financial deterioration and promptly
notify the competent authority.

Article 18C - Powers in Deteriorating Financial Conditions: Despite other measures, the
competent authority can take actions necessary to protect policyholders' interests if the solvency
position of an authorized undertaking worsens.

Article 18D - Asset and Liability Valuation: Authorized insurance and reinsurance undertakings
must value their assets and liabilities in line with Insurance Rules.

Article 18E - Technical Provisions: These undertakings must establish and maintain technical
provisions for all insurance obligations, following Insurance Rules, and may be asked to justify
the appropriateness of these provisions.

9
Article 18F - Solvency and Financial Condition Report: Undertakings must annually disclose a
report on their solvency and financial condition, complying with Insurance Rules, with provisions
for non-disclosure under specific circumstances and requirements for major development
disclosures.

Article 18G - Custody of Assets in Malta: The competent authority can require specified assets
to be held in custody in Malta or outside, ensuring compliance with regulations and preventing
transfer or encumbrance without authority permission.

Article 18H - Board Responsibility: The Board of Directors of authorized insurance or

reinsurance undertakings holds ultimate responsibility for ensuring compliance with the Act,
regulations, Insurance Rules, and Conduct of Business Rules, including obligations related to the
Solvency II Directive.

Article 18I - System of Governance:

• Insurance and reinsurance undertakings must establish an effective governance system

per guidelines specified in Insurance Rules.

• Responsibilities include ensuring fit and proper criteria for personnel, implementing risk
management, conducting solvency assessments, maintaining internal controls,
compliance, internal audit, and actuarial functions.

• Outsourcing does not exempt the undertaking from fulfilling its obligations under the Act.

• The MFSA Insurance Rules determine the specifics of the systems and functions.

• The governance system should be suitable for the undertaking's nature, scale, and
complexity of operations.

Part V - Accounts, Actuarial Investigations and Financial Statements

Article 19 - Financial Year:

• Notification Requirement: Undertakings with their head office in Malta applying for
authorization must notify the competent authority of their financial year.

• Alteration: Changes to the financial year need prior approval from the competent
authority.

• Third Country Undertakings: Similar notification requirements apply to third country

insurance or reinsurance undertakings.

Article 20 - Audited Financial Statements:

• Submission Requirement: Every authorized undertaking must submit audited financial

statements to the competent authority within specified periods.

• Display Requirement: These statements must be exhibited prominently in their offices

and branches in Malta and adhere to specific publication rules.

• Public Access: Undertakings must provide copies of audited financial statements to

individuals upon request, subject to reasonable fees.

Article 21 - Appointment of Auditors:

10
 • Annual Appointment: Authorized undertakings must appoint approved auditors
annually.

• Authority Intervention: Failure to appoint an auditor or fill a vacancy empowers the

competent authority to appoint one and determine remuneration.

• Reporting Duties: Auditors have specific reporting obligations as per the Insurance Rules

Article 22 and 23 - Actuary Appointment and Reports:

• Long-Term Business: Undertakings engaging in long-term with-profits business must

appoint approved actuaries, furnish relevant information, and submit reports at the close
of their financial year.

• Non-Compliance Reporting: Auditors and actuaries must report immediately to the

competent authority concerning significant breaches, impairments, or non-compliance
with specified regulations.

Article 24 - Reporting Obligations:

• Duty to Report: Auditors and actuaries must report to the competent authority any
significant matters or decisions concerning the undertaking that may affect its operations
or compliance with regulations.

Part VI – Powers of Intervention

Article 25 - Automatic Revocation of Authorization

• Conditions for Revocation: Specifies conditions under which an authorization is

automatically revoked, such as bankruptcy, merger, or withdrawal by overseas regulatory
authorities.

Article 26 - Power to Suspend or Revoke Authorization

• Grounds for Suspension/Revocation: Lists multiple grounds for the competent

authority to suspend or revoke an authorization, including false information, non-
compliance, financial instability, or inability to meet obligations.

• Instances of Non-Compliance: Addresses specific scenarios like failure to commence

business within 12 months, insufficient funds, or failure to comply with capital
requirements.

• Duty to Report: Specifies circumstances where the authority must notify and consult
with European regulatory authorities or overseas regulators.

Article 27 - Notification of Suspension or Revocation

• Process: Outlines the steps the competent authority must take before suspending or
revoking an authorization, including providing written notice to the undertaking and
allowing representations.

• Consultation Requirement: Requires consultation with overseas regulatory authorities

for third country insurance or reinsurance undertakings before revocation.

Article 28 - Power to Protect Public Interest

11
 • Measures to be Taken: Enumerates various measures the authority can take, like
requiring remedial actions, appointing advisors, restricting asset disposal, or appointing
a liquidator.

• Role of Appointed Persons: Clarifies the duties and powers of individuals appointed by
the competent authority in different scenarios, including advice, control, or liquidation.

• Court Involvement: Specifies conditions under which the competent authority may
apply to the court for dissolution and winding up of an undertaking.

• Cost Recovery: Empowers the authority to recover expenses related to its interventions
from the undertaking.

Part VII - Supervision of Authorized Insurance and Reinsurance Undertakings

Article 29 - Power to Require Information:

• Information Demands: The competent authority can demand detailed information and
documentation regarding authorized business activities and associated
individuals/entities.

• Documentation Handling: It has the authority to make copies of provided documents

and compel disclosure of missing information.

• Legal Implications: Documents or statements provided can be used as evidence, except

for privileged information as per criminal code provisions.

• Inspectorial Powers: The authority can appoint inspectors with similar information-
gathering powers, ensuring cooperation from officers and agents.

Article 30 - Examination of Affairs and Service Providers:

• Comprehensive Examination: Covers all pertinent books, documents, and information

related to the undertaking's affairs.

• Language Requirements: Information in other languages may need translation into

Maltese or English.

• Outsourcing Oversight: Enables access to service provider premises and mandates

notification to relevant authorities, facilitating on-site inspections by European regulatory
bodies.

Articles 31, 31A and 31B - Right of Entry for Information Retrieval:

• Authorized Personnel Entry: Allows competent authority personnel to enter premises

for information retrieval purposes.

• Directives and Supervisory Review:

• Directive Issuance: Empowers the authority to issue directives for compliance and
modifications, covering various aspects of undertakings' operations.

• Supervisory Review Process: Involves regular assessments to identify weaknesses and

ensure compliance with governance systems, risk assessments, and reporting
procedures.

12
Article 31C and 32 - Capital Add-On and Information Submission:

• Capital Add-On Imposition: Allows setting additional capital requirements under

exceptional circumstances.

• Information Submission: Mandates undertakings to provide necessary information for

supervisory purposes within defined timeframes.

Part VIIA – Group Supervision

Article 32A - Competent Authority's Responsibility:

• Responsible for supervising insurance and reinsurance undertakings at the group

level.

• Supervision is conducted according to regulations or Insurance Rules specific to

this section.

Article 32B - Group Supervisor:

• Definition and Functions: Designated as the overseeing authority for group supervision,
tasked with coordinating supervision, conducting financial assessments, ensuring
compliance, evaluating governance, and planning supervisory activities.

• Competent Authority as Group Supervisor: If the competent authority assumes this

role, responsibilities encompass coordinating information, financial and compliance
reviews, governance evaluations, and planning activities. They must organize meetings,
foster cooperation among supervisory bodies within the group, and possess the authority
to issue directives or decisions as per Solvency II Directive requirements.

• Establishment of College of Supervisors: Mandates the creation of a supervisory forum

chaired by the competent authority acting as the group supervisor. The specifics
regarding membership, operations, and consultation processes are stipulated by
regulations or Insurance Rules.

Article 32C - Cooperation and Exchange of Information:

• Cooperation among Authorities:

• Close collaboration between the competent authority and other supervisory

authorities overseeing individual undertakings within the group.

• Requirements for information sharing, immediate communication in case of

significant breaches, and meeting calls in exceptional circumstances.

• Escalation to EIOPA:

• If there are issues with information sharing or rejection of cooperation requests,

the competent authority can escalate the matter to EIOPA (European Insurance
and Occupational Pensions Authority) for assistance.

• Confidentiality and Information Sharing:

• Information obtained for group supervision purposes is treated as confidential

and protected under professional secrecy.

13
Article 32D - Verification of Information:

• On-Site Verification:

• Competent authority empowered to conduct on-site verifications in Malta

regarding information related to insurance or reinsurance undertakings subject to
group supervision.

• Procedures outlined for verification in Malta or other Member States, including

collaboration or participation with European regulatory authorities.

Part VIII - Transfer of Business of Insurance

Transfer of General Business (Articles 33-34)

• Approval Process: Describes the procedure for an insurance undertaking to transfer its
general business to another entity, specifying that approval from the competent authority
is required.

• Publication and Notification: Specifies the need for publishing notices in newspapers
and informing policyholders and relevant parties about the proposed transfer.

• Regulatory Consultation: Outlines the requirement for consultation with European

regulatory authorities in cases involving transfers to or from Member States or EEA States.

• Financial Solvency: Ensures that the transferee has sufficient financial resources and
meets solvency requirements to take over the transferred business.

• Legal Effect: Discusses the legal validity and effect of the approved scheme, allowing the
transfer of rights, obligations, and legal proceedings from the transferor to the transferee.

Transfer of Long-Term Business (Articles 35-36)

• Similar Process to General Business: Mirrors the process of transferring general

business but is specifically tailored for long-term insurance policies.

• Tribunal Approval: Requires approval from the Financial Services Tribunal, accompanied
by an independent actuary's report.

• Publication and Notification: Details regarding publication of notices and notifying

policyholders and concerned parties.

• Regulatory Consultation: Consultation with European regulatory authorities in relevant

scenarios.

Article 37 - Transfer of Business Restricted to Reinsurance

• Approval Criteria: Specifies conditions for the transfer of reinsurance business,

emphasizing the authorization and financial solvency requirements of the transferee.

• Financial Requirements: Ensures that the transferee possesses the necessary financial
resources to manage the transferred reinsurance business.

• Compliance: Requires the transferee to adhere to solvency requirements mandated by

applicable laws.

14
Article 37A - Transfer of Business of Insurance to an Authorized Insurance or Reinsurance
Undertaking

• Process for Transfers from Outside Malta: Details the procedure for transferring
insurance or reinsurance business from entities headquartered outside Malta to
authorized entities within Malta.

• Competent Authority Consent: Mandates that the competent authority in Malta must
consent in writing before such transfers take place.

• Protection of Policyholder Rights: Addresses the scenario where the competent

authority may refrain from issuing a certificate of solvency to protect the rights of
policyholders or contractual obligations.

Part IX - Acquisition and Disposal of Shares, Withdrawal, Dissolution And Winding Up

Acquisition and Disposal of Shares (Articles 38-38B)

• Notification Requirements: Stipulates that any person or group intending to acquire or

dispose of shares in an authorized insurance or reinsurance undertaking must notify the
competent authority. This includes details on intended shareholding and relevant
information as per the authority's requirements.

• Prohibition Without Notification: Imposes prohibitions and penalties if actions involving

shares are taken without notifying or obtaining approval from the competent authority.
This includes suspending voting rights acquired in contravention of the law.

• Assessment Procedure: Outlines a structured assessment period by the competent

authority after receiving notifications, allowing for a maximum of sixty working days to
review the proposed acquisition. It specifies conditions for approval or refusal of the
acquisition.

• Cooperation with Regulatory Authorities: Highlights the need for collaboration

between the competent authority and European or overseas regulatory bodies when
assessing acquisitions involving entities from those jurisdictions.

Mergers, Reconstructions, and Changes in Share Capital (Articles 38C-40A)

• Consent Requirement for Changes: Requires written consent from the competent
authority before authorized undertakings proceed with mergers, reconstructions, or
changes in share capital or voting rights.

• Ceasing Business Operations: Specifies procedures for authorized undertakings

intending to cease carrying on their insurance business, including notifications,
discharge of liabilities, and appointing entities to service or run-off existing contracts.

• Winding Up and Dissolution: Outlines provisions for the winding up and dissolution of
authorized insurance undertakings, specifying restrictions on disposal of assets and
prioritizing liabilities related to insurance business.

Reorganisation and Dissolution of Long-Term Business (Article 42)

• Consent Requirement for Dissolution: Specifies that authorized undertakings engaged

in long-term business cannot dissolve without the consent of the competent authority.

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 • Asset Allocation: Defines how assets are allocated in case of dissolution, ensuring that
assets tied to specific types of business (e.g., long-term business) are used to cover
corresponding liabilities.

Part X: Obligations on Undertakings

Article 43 - Notification of Changes

• Holder's Obligation: Holders of insurance authorizations must notify the competent

authority of any material changes in documentation or information provided under the
Act, regulations, Insurance Rules, or Conduct of Business Rules.

• Additions or Alterations: Authorized insurance undertakings in Malta need prior consent

for any additions or alterations to their memorandum or articles of association. The
competent authority must approve these changes before they take effect.

Article 44 - Contracts of Long-Term Business:

• Statutory Notice: Insurance undertakings engaging in long-term business must serve a

statutory notice to the other party before entering into a contract. Regulations may
specify matters related to this notice and exempt certain contracts from its requirement.

Article 45 - Regulations on Long-Term Business Contracts

• Scope: This section allows for regulations related to contracts of insurance for long-term
business entered into by authorized undertakings whose head office is in Malta. It covers
contracts where benefits payable to the policyholder are determined by property values
or fluctuations.

Article 46 - Validity of Contracts despite Breach

• Contract Validity: Contracts of insurance will not be void or voidable solely due to a
breach of provisions under this Act, the Insurance Distribution Act, or related regulations.

Article 47 - Language Specifications

• Contract Language: The competent authority can specify the language for insurance
contracts relating to risks in Malta or commitments where Malta is the country of
commitment. In the absence of specific rules, contracts are expressed in English.

Article 48 - Insurance Advertisements

• Prohibition of Misleading Advertisements: Insurance undertakings cannot issue

misleading advertisements or promotional activities related to their business. The
competent authority can set rules for the form and content of such advertisements and
take corrective actions if violations occur.

Article 48A - Provisions relating to Lloyd’s.

• Definition of Syndicate: Defines syndicates underwriting business at Lloyd’s in Malta.

• Representative Requirement: Lloyd’s must have a resident representative in Malta

authorized to act on its behalf.

Article 48B - Appointment of Intermediaries

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 • Utilization of Intermediaries: Authorized insurance or reinsurance undertakings must
use services of enrolled or registered intermediaries as per the Insurance Distribution Act
or related directives.

Article 48C - Policy Conditions and Premiums

• Notification Requirements: Specifies circumstances under which an authorized

undertaking needs to notify the competent authority regarding policy conditions,
premiums, and technical bases.

Article 48D - Application of Insurance Distribution Act

• Compliance Requirement: Authorized insurance and reinsurance undertakings

engaged in distribution activities must adhere to applicable provisions of the Insurance
Distribution Act and related rules.

Part XI: Protection and Compensation Fund

Article 49 - Establishment of the Fund

• Purpose: Establishes the "Protection and Compensation Fund" to pay claims against an
insolvent insurance undertaking in Malta and compensate victims of road traffic
accidents, subject to prescribed limitations and restrictions.

Article 50 - Contributions to the Fund

• Composition: The Fund includes contributions made under this Act and related
regulations, along with other assets and revenues.

• Contributions: All insurance undertakings operating in Malta must contribute to the Fund
as prescribed by regulations. Different contributions may apply based on various factors
such as types of insurance business, classes, or specific circumstances.

Article 51 - Management of the Fund

• Regulation Compliance: The Fund's management and handling adhere to regulations

under this Act.

• Segregation of Funds: Regulations ensure separate treatment of contributions for long-

term and general business. Payments into the Fund are used exclusively for
compensation related to the respective business types.

Article 52 - Prescription for Claim Payment

• Claim Timeframe: Stipulates the time limit within which a claim for compensation from
the Fund must be made—within two years from specific events for claims under different
categories as outlined in Article 49.

Article 53 - Exemption from Income Tax

• Tax Exemption: Contributions made to the Fund and any income generated from Fund
assets are exempt from income tax liabilities under existing laws.

Article 54 - Power to Issue Regulations

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 • Regulatory Authority: The Minister, after consulting the competent authority, holds the
power to issue regulations to effectively implement the provisions of this Part. This
includes transposing requirements arising from EU Directives, Regulations, or similar
measures.

Part XII: General Provisions

Article 55 - Co-operation in Supervisory Duties and Information Sharing

• Objective: Facilitates the exchange of information between the competent authority and
various regulatory bodies, both within and outside the European Union, for effective
insurance and reinsurance supervision.

• Recipient Categories: Includes authorities overseeing financial markets, liquidation

procedures, audit bodies, bodies involved in winding-up proceedings, among others.

• Conditions: Specifies conditions for exchanging information, ensuring the purpose,

confidentiality, and necessary consent for disclosure.

• Power to Issue Regulations: Grants the Minister authority, after consultation, to issue
regulations to enhance the provisions of this article.

Article 55A - Co-operation with EIOPA

• Objective: Mandates cooperation between the competent authority and EIOPA

(European Insurance and Occupational Pensions Authority) for fulfilling duties outlined in
the Solvency II Directive.

Article 55B - Co-operation with Third Countries

• Agreements: Allows the competent authority to enter into cooperation agreements with
overseas regulatory bodies under strict confidentiality provisions similar to those
required under articles 55 and 59.

Article 56 - Communication by Auditors, etc., with the Competent Authority

• Professional Secrecy Waiver: Enables auditors, actuaries, and appointed persons to

communicate relevant information to the competent authority without contravening
professional secrecy duties.

Article 57 - The Financial Services Tribunal

• Definition: Identifies the Financial Services Tribunal under the Malta Financial Services
Authority Act, assigning it specific functions related to deciding applications for the
transfer of long-term business and appeals.

Article 58 - Appeals

• Appeal Authority: Establishes the Financial Services Tribunal as the exclusive body for
appeals on various matters listed within this article, ranging from refusal of authorizations
to administrative penalties.

Article 59 - Confidentiality

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 • Information Confidentiality: Defines the duty of professional secrecy for information
obtained by the competent authority or its agents and specifies conditions for disclosure,
ensuring confidentiality except in specific legal scenarios.

Article 60 - Communication of Confidential Information

• Exchange of Information: Enables the exchange of information among insurers,

intermediaries, and law enforcement bodies for the prevention, detection, or suppression
of insurance fraud, with due consideration for data protection regulations.

Article 61 - Notice and Document Delivery

• Means of Delivery: Specifies various methods of serving notices or documents under the
Act.

• Definition of "Officer": Expands the term "officer" to include various roles associated
with insurance bodies.

Article 62 - Continuation of Entities

• Regulations for Continuation: Outlines regulations allowing foreign entities to continue

as authorized under this Act and vice versa.

• Compliance Criteria: Specifies the conditions and approvals required for the
continuation process.

• Corporate Structure Reference: Extends references to different corporate structures.

• Supremacy of Regulations: States that regulations under this article override conflicting
provisions in the Companies Act.

Article 63 - Valuation Regulations – Deleted from Act

Article 64 - Minister's Power to Make Regulations

• Regulation Scope: Defines the Minister's authority to create, amend, or revoke

regulations for multiple facets of insurance operations.

• Penalties and Enforcement: Specifies penalties for non-compliance, including fines

and potential imprisonment.

• Group Supervision: Allows for regulations related to the supervision of insurance

undertakings in a group.

• Special Purpose Vehicles: Empowers regulations concerning special purpose vehicles

related to insurance activities.

• Exemptions and Modifications: Allows for exemptions, modifications, and conditions

related to insurance laws.

Article 64A - Power to Make Regulations for Exclusive Economic Zone

• Scope of Power: Grants authority to regulate matters concerning exclusive economic

zone areas or environmental protection areas as defined in the Exclusive Economic Zone
Act.

Article 65 - Offences and Penalties

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 • Offence Categories: Specifies various offenses under the Act and penalties associated
with them.

• Enforcement Procedure: Outlines the procedures and penalties for various offenses.

Article 66 - Proceedings for an Offence under this Act

• Attorney General's Sanction: Requires the Attorney General's sanction for commencing
proceedings related to offences under this Act.

Article 67 - Savings

• Continuity of Actions: Ensures the continuation of licenses and actions initiated under
the previous Act.

• Transition Period: Provides a transition period for companies to conform to the new Act.

• Transfer of Assets and Liabilities: Facilitates the transfer of assets and liabilities from
the Security Fund to the new Protection and Compensation Fund.

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