Regulatory Requirements

The Insurance Business Act, 1998 lays down the requirements for the issue of an authorisation to a company to carry on business of insurance. Under the Insurance Business Act, captives are referred to as affiliated insurance companies. The Act defines the business of affiliated insurance as the business of an insurance company which is registered in Malta and whose business of insurance is restricted to risks originating with shareholders or connected undertakings or entities.

The Malta Financial Services Authority shall issue an authorisation when it is satisfied that:

  1. An application for authorisation is made in writing by a company in such form and manner as the MFSA may from time to time determine.
  2. The company’s objects are limited to business of insurance and operations arising directly there from, to the exclusion of all other commercial business. In so far as a company carrying on business restricted to reinsurance, the company’s objects are limited to the business of reinsurance and related operations.
  3. The company has disclosed to the satisfaction of the MFSA such information as the MFSA has requested of it in relation to persons who will, upon the authorisation of the company, have any proprietary, financial or other interest in, or in connection with, that company.
  4. All qualifying shareholders, controllers and all persons who will effectively direct the business of insurance are fit and proper persons to ensure its sound and prudent management.
  5. The company has submitted to the satisfaction of the MFSA a Scheme of Operations.
  6. The company’s own funds, whether in Euro or in other currencies acceptable to the MFSA are at all times, not less than such amount appropriate for the kind of business carried on by the company as specified in Insurance Rule 1 of 2007 and such own funds are unencumbered at all times.

The MFSA is to determine an application for authorisation to carry on business of insurance within a maximum of six months (three months for an application restricted to business of reinsurance or affiliated insurance) of receiving the information required to be submitted under the Act; and if it refuses to issue the authorisation it shall inform the applicant in writing of the reasons for refusal.