Malta's strengths lie in its EU-based regulatory regime, combined with the approachability of the Malta Financial Services Authority (MFSA), which engages with the industry and prospective applicants and seeks to establish communication and dialogue with stakeholders.
The domicile has also developed an innovative product structuring framework, such as protected cell companies, reinsurance special purpose vehicles and insurance securitisation cell legislation, which it manages within strong regulatory parameters.
Captive insurance and captive reinsurance undertakings, as defined in Articles 13(2) and 13(5) of Solvency II, have been transposed into Malta's Insurance Business Act, meaning they are authorised undertakings in the domicile. Captive insurers and captive reinsurers must also adhere to the Insurance Business (Captive Insurance Undertakings and Captive Reinsurance Undertakings) Regulations of 2003 (LN 334 of 2003).
In particular, the regulations provide that certain provisions of the act do not apply to a captive insurer or captive reinsurer due to the nature of the business.
These include an exemption from the requirement to provide a statutory notice to a policyholder, advertising requirements and exemption from the requirement to contribute to the Protection and Compensation Fund in the case of insolvency of an undertaking engaged in insurance. All other prudential requirements under the act that are applicable to insurance undertakings are also applicable to captives.
Prospective applicants need to submit an application according to the act. An application for authorisation is processed within a statutory period of three months of receiving a properly completed application form together with the requisite documentation.
The MFSA aims to make the application process an efficient and manageable one. It is an interactive process involving contact and consultation between applicant and the MFSA prior to and after an application is formally submitted. In this context, it is recommended that the promoters hold a preliminary meeting with the MFSA to outline their proposal. This meeting should be held well in advance of submitting an application for authorisation.
More information on captive insurance in Malta can be found at www.mfsa.com.mt.
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