Insurance Licensing

The Insurance Distribution Directive (“IDD”) is aimed not only at insurance agents, brokers and managers, but also at insurance undertakings which, likewise, distribute insurance products, thereby establishing a level playing field between all insurance distributors. CSB Group is equipped with the necessary expertise, knowledge and experience to assist an interested undertaking to apply for authorisation and be licensed by the MFSA.

Insurance Business

Under Malta Law the business of insurance is governed by the Insurance Business Act, Chapter 403 of the Laws of Malta (the “Act”). Moreover the Malta Financial Services Authority (the “MFSA”) is the supervisory authority entrusted to carry out the functions assigned to it by or under Act and any regulations, Insurance Rules or Conduct of Business Rules made thereunder and to ensure that insurance and reinsurance undertakings carrying on the business of insurance in or from Malta comply with the provisions of Act and of any regulations made thereunder, with any Insurance Rules and Conduct of Business Rules made and directives.

As stated under the Act no person shall carry on, nor hold itself out as carrying on, in or from Malta business of insurance unless authorised by the MFSA. In this respect, the MFSA shall not issue an authorisation unless it is satisfied that, amongst other conditions an application for authorisation is made in writing by an undertaking in such form and manner as the MFSA may from time to time determine.

CSB Group is equipped with the necessary expertise, knowledge and experience to assist an interested undertaking to apply for the above-mentioned authorisation and obtain an insurance licence from the MFSA.

Our Insurance Licensing Services Include:

1. Assistance in the completion of the necessary licensing application for an insurance business under the auspice of the MFSA;
2. Advisory throughout the whole application process;
3. Assistance with the completion of the Personal Questionnaires; Competency Forms and Assessment Forms;
4. Guidance and advisory with respect to the conditions for carrying on Business of Insurance;
5. On-going liaison with the MFSA;
6. Drafting and/or review of the necessary business plan, financial projections and required policies.

The Insurance Distribution Directive in Malta

By way of background, the Insurance Distribution Directive (“IDD”) is aimed not only at insurance agents, brokers and managers, but also at insurance undertakings which, likewise, distribute insurance products, thereby establishing a level playing field between all insurance distributors.

The IDD’s main scope was not to introduce additional solvency and capital requirements, but rather to lay down rules regarding product governance and oversight, conflicts of interest, knowledge and ability and to introduce suitability and appropriateness assessments, similar to those found under MiFID (2014/65/EU).

The IDD was transposed into Malta on the 10th of July 2018 and consequently the ‘Insurance Intermediaries Act’ was renamed to ‘Insurance Distribution Act’, Chapter 487 of the Laws of Malta (the “IDA”).

The key requirements which were introduced by the IDD are as follows:

1. Product Oversight and Governance: the IDD now requires insurance distributors, insurance undertakings and insurance intermediaries, to establish and maintain a Product Governance and Oversight Policy, by means of which they will govern any arrangements and procedures relating to the insurance products they intend to distribute.
2. Conflicts of Interest, including Inducements and Remuneration: The IDD requires insurance distributors not only to disclose any conflicts of interest, but to also seek to identify, prevent and manage them in so far as this is possible.
3. Suitability and Appropriateness Assessments: One of the more onerous obligations introduced by the IDD relates to the carrying out of assessments of demands and needs, suitability assessments and appropriateness assessments, as the case may be.
4. Product information and Disclosures: Client protection is undoubtedly one of the main objectives behind the IDD. In this respect, the directive introduces a number of obligations intended mostly to equip clients with better information, knowledge and understanding of the insurance products they’re buying, and certain disclosures which must be made by insurance distributers before, during and after a sale is concluded.

At CSB Group we understand that the above may seem to be onerous and time consuming, however, we may assist Insurance Agents, Managers with a Malta licence application. We may also assist in obtaining a license for Insurance Brokers. Our insurance licensing experts will support you through every step of the way, including but not limited to: 

1. Advisory with respect to Insurance Agents, Managers and Brokers;
2. Assistance in the application for registration of individuals in relevant registers;
3. Assistance in the registration of persons carrying out tied intermediaries activities;
4. Assistance in the registration of persons carrying out ancillary intermediaries activities with an enrolled insurance broker;
5. Assistance in the application for persons to be entered in the Tied Insurance Intermediaries List
6. Assistance in the application for persons to be entered in the Ancillary Insurance Intermediaries List;
7. On-going liaison with the MFSA;
8. Drafting and/or review of the necessary business plan, financial projections and required policies.

The Importance of Compliance Officers in the Insurance Industry

The Malta Financial Services (the ‘MFSA’) being the responsible regulatory authority for the insurance industry requires that an insurance company/broker identifies an individual who will act as a Compliance Officer (the ‘CO’).

Essentially, the compliance person’s purpose is to ensure that the entity complies with all laws under which it operates and rules issued by the Regulator, being the MFSA in this case. Thus, assisting in managing the risk of non-compliance.

The Insurance Compliance Officer’s responsibilities and duties include but are not limited to the below:

• The Insurance Compliance Officer is responsible for all aspects of compliance and the licensed company’s adherence to all the applicable insurance legislation, rules and licence conditions;
• The Insurance Compliance Officer is expected to exercise independent judgement and to exercise proper day-to-day supervision and control over the activity of the Company;
• The Insurance Compliance Officer must familiarise himself thoroughly with Insurance Legislation and the conditions of authorization and take the steps to ensure that the company’s staff are familiar with those conditions that are relevant to their role within the Company. The CO must be aware in particular of the Insurance Business (Criteria of Sound and Prudent Management) Regulations, 1999 which require the Company to have adequate operational, administrative and financial procedures and controls to ensure compliance with the regulatory requirements and to supervise the activities of its tied insurance intermediaries;
• The Insurance Compliance Officer is expected to not to breach, or to permit breaches by others, of internal control procedures and systems or conditions of authorisation to which the company is subject;
• The Insurance Compliance Officer is expected to draw the attention of the person concerned and, where appropriate, to the attention of the board of directors upon becoming aware of any breaches;
• The Insurance Compliance Officer is expected to record in writing any breaches and course of action taken as a result;
• The Insurance Compliance Officer is expected to notify the Authority of any breach of conditions of the company’s authorisation upon being aware of such a breach;
• The Insurance Compliance Officer is to ensure, as far as possible, that incorrect or misleading information is not provided deliberately or recklessly to it, either in supervisory returns or in other way.

CSB International Limited provides post-licensing services which include fulfilling the compliance function, subject to MFSA approval.