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Chapter 403

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Din il-liġi tirregola n-negozju tal-assigurazzjoni, inklużi l-awtorizzazzjoni, is-superviżjoni, u r-rekwiżiti finanzjarji għall-kumpaniji tal-assigurazzjoni. L-għan tagħha huwa li tistabbilixxi qafas legali għall-operat tal-industrija tal-assigurazzjoni.

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Legal text
Obsah (6)Article 2Article 3Article 212Article 4Article 171Article 248

ACT To regulate the business

insurance. 1st October, 1998 ACT XVII

1998, as amended by Acts XVII

2002, XIII

2004, XII

2006 and XX

2007; Legal Notice 426

2007; and Acts III and XVII

2009, XIX

2010, X

2011, XX

2013 ,XXXIII

2015 ,XXVI

2018, V

2020 and Act XLVI

2021 and XXXV

2023 and XXXII

2024. ARRANGEMENT

ACT Part I. Part II. Part III. Part IV. Part V. Part VI. Part VII. Part VIIA. Part VIII. Part IX. Part X. Part XI. Part XII. Articles 1-2 3-4 5 - 13 14 - 18I 14 - 18G 18H - 18I Preliminary Supervision

Business

Insurance Authorisation for carrying on Business

Insurance Conditions for carrying on Business

Insurance Title I: Financial Requirements Title II: Governance Accounts, Actuarial Investigations and Financial Statements 19 - 24 Powers

Intervention 25 - 28 Supervision

Authorised Insurance and Reinsurance 29 - 32 Underakings Group Supervision 32A - 32E Transfer

Business

Insurance 33 - 37 Acquisition and Disposal

Shares, Withdrawal, Dissolution and Winding up 38 - 42 Obligations on Undertakings 43 - 48C Protection and Compensation Fund 49 - 54 General Provisions 55 - 69 First Schedule Second Schedule Third Schedule Fourth Schedule SCHEDULES Provisions relating to Lloyd’s Classes

long term business Classes and groups

classes

general business Provisions relating to insurance agents and managers INSURANCE BUSINESS PART I PRELIMINARY Short title. 1. The short title

this Act is the Insurance Business Act. Interpretation and scope. Amended by: XVII. 2002.236; XII. 2006.76; XX. 2007.126; XVII. 2009.30; X. 2011.74; XXXIII. 2015.4; XXVI.2018.61; V.2020.41; XXXV.2023.44; XXXII.2024.35. 2.

(1)In this Act, unless the context otherwise requires - "advertisement", in relation to the business

insurance, means any form or medium

marketing activity or communication disseminated to the public by means

all types

media, other than a prospectus, which promotes the purchase or procurement

a service or product and which is addressed by an authorised insurance undertaking to a client or potential client; "approved actuary" and "actuary" have the meaning assigned to them by article 22

(5); "approved auditor" and "auditor" have the meaning assigned to them by article 21
(10); "authorisation", in relation to business

insurance, or to a m a t t e r c o n n e c t e d t h e r ew i t h o r a n c i l l a r y t h e r e t o , m e a n s a n authorisation or a deemed authorisation under this Act, and "authorised" shall be construed accordingly; "authorised insurance undertaking" means an undertaking, which has received authorisation pursuant to article 7 to carry on direct general business and, or long term business, and includes an undertaking authorised to carry on direct and reinsurance business; "authorised reinsurance undertaking" means an undertaking which has received authorisation pursuant to article 7 to carry on business restricted to reinsurance; "body corporate" means any entity having a legal personality distinct from that

its members and also includes a foreign corporation; "branch" m eans premises o f an authorised insurance and reinsurance undertaking, other than its head

fice, from which the business

insurance is carried on; "business

insurance" means the effecting and carrying out

contracts

insurance

such class or classes

long term business or class or classes or part classes

general business as respectively specified in the Second Schedule and Part I

the Third Schedule, and, without prejudice to anything contained in any other law, includes (a) the effecting and carrying out, by a person not carrying on business

banking,

(i) contracts for fidelity bonds, performance bonds, administration bonds, bail bonds or customs bonds or similar contracts

guarantee, being contracts effected by way

business (and not merely incidentally to some other business carried on by the person effecting them) in return for the payment

one or more premiums; (ii) capital redemption contracts based on actuarial INSURANCE BUSINESS calculation whereby, in return for single or periodic payments agreed in advance, commitments

specified duration and amount are undertaken; (iii) contracts to manage the investments

pension funds, and, in relation to contracts to manage the investments

pension funds, the expression "a person not carrying on business

banking" includes "a person not carrying on investment services"; (b) any business carried on in connection with or ancillary to business

insurance; (c) unless otherwise specified, business

reinsurance; "captive insurance undertaking" means an authorised insurance undertaking, owned either by a financial undertaking, other than an insurance or reinsurance undertaking or a group

insurance or reinsurance undertakings within the meaning

article 2, or by a non-financial undertaking, the purpose

which is to provide insurance cover exclusively for the risks

the undertaking or undertakings to which it belongs or

an undertaking or undertakings

the group

which it is a member; "captive reinsurance undertaking" means an authorised reinsurance undertaking, owned either by a financial undertaking, other than an insurance or reinsurance undertaking or a group

insurance or reinsurance undertakings within the meaning

article 2, or by a non-financial undertaking, the purpose

which is to provide reinsurance cover exclusively for the risks

the undertaking or undertakings to which it belongs or

an undertaking or undertakings

the group

which it is a member; "cell" has the same meaning as is assigned to it by the Companies Act; "cell company" has the same meaning as is assigned to it by the Companies Act; "close links" means a situation in which two or more natural or legal persons are linked by control or participation, or a situation in which two or more natural or legal persons are permanently linked to one and the same person by a control relationship; "commitment" means a commitment represented by any one or more

the kinds

classes

long term business contained in the Second Schedule; "competent authority" means the Malta Financial Services Authority established by the Malta Financial Services Authority Act; "conditions" includes obligations and restrictions; "Conduct

Business Rules" means Rules relating to conduct

business issued by the competent authority under various articles

this Act and under any regulations made thereunder; "contract

insurance" and "contract", in relation to business

insurance, mean an agreement in which an insurer agrees, for a INSURANCE BUSINESS consideration, to pay to or for the account

the insured a sum

money or other consideration, whether by way

indemnity against loss, damage or liability or otherwise, on the happening

a specified event with respect to which there is an element

uncertainty as to when or whether it will take place; "control" means the relationship between a parent undertaking and a subsidiary undertaking, as set out in Article 22

Directive 2013/34/EU

the European Parliament and

the Council

26 June 2013 on the annual financial statements, consolidated financial statem ents and related reports

certain types

undertakings, amending Directive 2006/43/EC

the European Parliament and

the Council and repealing Council Directives 78/ 660/EEC and 83/349/EEC, or a similar relationship between any natural or legal person and an undertaking; "controller", in relation to a body corporate, is a person who, alone or together with others, exercises the power to determine the financial and operating policies

the body corporate; "country

the commitment" means any country where the policyholder has his habitual residence or, if the policyholder is a legal person, the country where the latter’s establishment, to which the contract relates, is situated; "country outside Malta" means and includes any country, territory or place outside Malta; "director", in relation to an undertaking, includes an individual occupying the position

a director

the undertaking, by whatever name he may be called, empowered to carry out substantially the same functions in relation to the direction

the undertaking as those carried out by a director and, in respect

a third country insurance undertaking or a third country reinsurance undertaking, includes a member

a local board, and the person designated as the representative

that undertaking for the purpose

article 11

(1)(b)(i); "document" or "documentation" includes information recorded in any form and, in relation to information recorded otherwise than in legible form, references to its production include references to producing a copy

the information in legible form; "EEA State" means a State which is a contracting party to the agreement on the European Economic Area signed at Oporto on 2 May, 1992 as amended by the Protocol signed at Brussels on the 17th March, 1993 and as amended from time to time; "EIOPA" means the European Insurance and Occupational Pensions Authority established in terms

article 1

Regulation (EU) No 1094/2010; "establishment" means the head

fice, or any branches

an authorised insurance undertaking or an authorised reinsurance undertaking; "European insurance undertaking" means an undertaking having its head

fice in a Member State or an EEA State, other than Malta, pursuing the activity

direct insurance within the meaning INSURANCE BUSINESS

Article 2

the Solvency II Directive, which has received authorisation in accordance with Article 14

the Solvency II Directive; "European regulatory authority" means the supervisory authority or supervisory authorities as defined in Article 13

the Solvency II Directive, designated by a Member State or EEA State, other than Malta, empowered by law or regulation to supervise insurance or reinsurance undertakings; "European reinsurance undertaking" means an undertaking having its head

fice in a Member State or an EEA State, other than Malta, pursuing business restricted to reinsurance within the meaning

Article 2

the Solvency II Directive which has received authorisation in accordance with Article 14

the Solvency II Directive; "European right" means the entitle-ment

an authorised insurance undertaking, authorised reinsurance undertaking, European insurance undertaking or a E uropean reinsurance undertaking to establish a branch, or provide services, in a Member State or an EEA State, other than that in which it has its head

fice (a) in accordance with the Treaty

Rome as applied in a Member State or an EEA State; (b) subject to the requirements

the Solvency II Directive and subject to any regulations made under this Act, or Insurance Rules issued by the competent authority pursuant to this Act, implementing such requirements; "European Systemic Risk Board" means the European Systemic Risk Board established by Regulation (EU) No 1092/2010

the European Parliament and

the Council

24 November 2010 on European Union macro-prudential oversight

the financial system and establishing a European Systemic Risk Board; "financial undertaking" means any

the following entities: (a) a credit institution, a financial institution or an ancillary banking services undertaking within the meaning

sub-paragraphs

(1),
(17)and
(22)

paragraph

(1)

Article 3

Directive 2013/36/EU respectively; (b) an insurance undertaking, or a reinsurance undertaking or an insurance holding company within the meaning

Article 212

(1)(f)

the Solvency II Directive; (c) an investment firm or a financial institution within the meaning

point 1

Article 4

(1)

Directive 2014/65/ EU; or (d) a mixed financial holding company within the meaning

Article 2

(15)

Directive 2002/87/EC; "financial year" shall be construed in accordance with article 19

(4); "functions" includes responsibilities, powers and duties; INSURANCE BUSINESS "general business" has the meaning assigned to it by article 5
(1); "group" means a group

undertakings that: (a) consists

a participating undertaking, its subsidiaries and the entities in which the participating undertaking or its subsidiaries hold a participation, as well as undertakings linked to each other by a relationship as set out in Article 22

Directive 2013/34/EU

the European Parliament and

the Council

26 June 2013 on the annual financial statements, consolidated financial statements and related reports

certain types

undertakings, amending Directive 2006/43/ EC

the European Parliament and

the Council and repealing Council Directives 78/660/EEC and 83/349/ EEC; or (b) is based on the establishment, contractually or otherwise,

strong and sustainable financial relationships among those undertakings, and that may include mutual or mutual-type associations, provided that: (i) one

those undertakings effectively exercises, through centralised coordination, a dominant influence over the decisions, including financial decisions,

the other undertakings that are part

the group; and (ii) the establishment and dissolution

such relationships for the purposes

Title III

the Solvency II Directive are subject to prior approval by the group supervisor, where the undertaking exercising the centralised coordination shall be considered as the parent undertaking, and the other undertakings shall be considered as subsidiaries; "guarantee fund" means the body referred to in Article 10

(1)

Directive 2009/103/EC

the European Parliament and

the Council

16 September 2009 relating to insurance against civil liability in respect

the use

motor vehicles, and the enforcement

the obligation to insure against such liability; "holding company" has the same meaning as is assigned to the term "parent company" in the Companies Act; "inspector" means a person appointed as such by the competent authority under article 30

(1); "insurance agent" means a person enrolled as such under the Insurance Distribution Act; "Insurance Distribution Directive" means Directive (EU) 2016/97

the European Parliament and

the Council

20 January 2016 on insurance distribution (recast), as amended from time to time, and includes any delegated acts and any technical standards that have been or may be issued thereunder; "insurance manager" means a person enrolled as such under the Insurance Distribution Act; INSURANCE BUSINESS "Insurance Rules" means rules in respect

the business

insurance issued by the competent authority under various articles

this Act and under any regulations made thereunder; "insured" means the party to whom, or on whose account, or to whose beneficiaries, a sum

money or other consideration is payable under a contract

insurance on the happening

a specified event; "insurer" means the party to a contract

insurance who agrees to pay a sum

money or other consideration on the happening

a specified event; "Lloyd’s" means the society and corporation incorporated by Lloyd’s Act, 1871,

the United Kingdom; "long term business" has the meaning assigned to it by article 5

(1); " M a l t a ’s i n t e r n a t i o n a l c o m m i t m e n t s " m e a n s M a l t a ’s commitments, responsibilities and obligations arising out

membership

th e European U nion an d mem bersh ip

, or affiliation to, or relationship with, any international, global or regional organisations or grouping

countries or out

any treaty, convention or other international agreement, however called, w he t h e r b i la t e r a l o r m u lt i l a t e r a l , i n c l u d i n g M e m o r a n d a o f Understanding, to which Malta is a party; " M e m b e r St a t e " m e a n s a M e m b e r St a t e o f t h e E u r o p e a n Communities; "Minister" means theMinister responsible for the regulation

Financial Services; "money laundering" has the same meaning as is assigned to it by the Prevention

Money Laundering Act; "motor vehicle" has the same meaning as assigned to it by article 2

the Motor Vehicle Insurance (Third Party Risks) Ordinance; "motor vehicle liability insurance business" means the business

insurance in class 10 as specified in Part I

the Third Schedule; "

ficer", in relation to an undertaking, includes a director, manager or company secretary or any person effectively acting in such capacity whether formally appointed or not; "outsourcing" means an arrangement

any form between an authorised insurance or reinsurance undertaking and a service provider, whether a supervised entity or not, by which that service provider performs a process, a service or an activity, whether d i r e c t l y o r b y s u b - o u t s o u r c i n g , w h i c h w o u l d o t h e r w i se b e performed by the authorised insurance or reinsurance undertaking itself, and "outsource" shall be construed accordingly; "overseas regulatory authority" means an authority in a country or territory outside Malta, that is not a Member State or EEA State, which exercises any regulatory or supervisory function in relation to financial services corresponding to a function

the competent authority as defined in the Malta Financial Services Authority Act; "own funds" shall be construed in accordance with Insurance INSURANCE BUSINESS Rules made by the competent authority for the purposes

this Act; "participation" means the ownership, direct or by way

control,

20% or more

the voting rights or capital

an undertaking; "participating undertaking" means an undertaking which is either a parent undertaking or other undertaking which holds a participation, or an undertaking linked with another undertaking by a relationship as set out in Article 22

Directive 2013/34/EU

the European Parliament and

the Council

26 June 2013 on the annual financial statements, consolidated financial statements and related reports

certain types

undertakings, amending Directive 2006/43/EC

the European Parliament and

the Council and repealing Council Directives 78/660/EEC and 83/349/EEC; "policy", in relation to business

insurance, means and includes a policy or a similar document, by whatever name it may be called, evidencing a contract

insurance; "policyholder" means the person who for the time being is the legal holder

the policy for securing the contract with the insurer; "premium" means the consideration paid or payable by an insured under a contract

insurance; "prescribed" means prescribed by regulations made under this Act; "qualifying shareholding" means a direct or indirect holding in an undertaking which represents ten per centum or more

the share capital or

the voting rights, taking into account the voting rights as set out in Articles 9 and 10

Directive 2004/109/EC

the European Parliament and

the Council

15 December 2004 on the harmonisation

transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market, and amending Directive 2001/34/EC, as well as the conditions regarding aggregation thereof laid down in Article 12

(4)and
(5)

that Directive, or which makes it possible to exercise a significant influence over the management

the undertaking in which that holding subsists, and "qualifying shareholder" shall be construed accordingly: Provided that, in determining whether the criteria for a qualifying shareholding are fulfilled, the competent authority shall not take into account voting rights or shares which investment firms or credit institutions may hold as a result

providing the underwriting

financial instruments and, or placing

financial instruments on a firm commitment basis in terms

point

(6)

Section A

Annex 1 to Directive 2014/65/EU

the European Parliament and

the Council

15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/ 61/EU (recast), provided that those rights are, on the one hand, not exercised or otherwise used to intervene in the management

the issuer and, on the other, disposed

within one year

acquisition; "reconstruction" has the same meaning as in the Companies Act; "regulated market" means either

the following: INSURANCE BUSINESS (a) in the case

a market situated in Malta, a market authorised in terms

the Financial Markets Act; (b) in the case

a market situated in a Member State or an EEA State, other than Malta, a regulated market as defined in point

(21)

Article 4

(1)

Directive 2014/65/ EU

the European Parliament and

the Council

15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/ EU (recast), as amended from time to time; or (c) in the case

a market situated in a non-Member State or non-EEA State, a financial market which fulfils the following conditions: (

  1. i)it is recognised by the competent authority and fulfils requirements comparable to those laid down Directive 2014/65/EU; and (
  2. ii)the financial instruments dealt in on that market are

a quality comparable to that

the instruments dealt in on the regulated market or markets in Malta; "Regulation (EU) No 1094/2010" refers to Regulation (EU) No 1094/2010

the European Parliament and

the Council

24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/79/EC; "reinsurance" means one

the following: (

  1. a)the activity consisting in accepting risks ceded by an insurance undertaking or third-country insurance undertaking, or by another reinsurance undertaking or third-country reinsurance undertaking; or (
  2. b)the provision

cover by a reinsurance undertaking to an institution that falls within the scope

Directive (EU) 2016/2341

the European Parliament and

the Council; "risk situated in Malta" means and includes (

  1. a)in the case where the insurance relates either to buildings or to buildings and their contents, in so far as the contents are covered by the same insurance policy, any risk related to property situated in Malta; (
  2. b)in the case where the insurance relates to vehicles

any type, any risk related to any vehicles registered in Malta: Provided that, where a motor vehicle is dispatched from a Member State or an EEA State into Malta, the risk is deemed to be situated in Malta, immediately upon acceptance

delivery by the purchaser for a period

thirty days, even though the vehicle has not been formally registered in Malta; (c) in the case where the insurance relates to travel or INSURANCE BUSINESS holiday risks, whatever the class concerned, any risk related to travel or holiday if the policy covering the risk is

a duration

four months or less and the policy is taken out in Malta; (d) in the case where the insurance relates to any risk

any kind, other than a risk specified in the foregoing paragraph (a), (b) or (c), any risk

any such kind if the policyholder has his habitual residence in Malta or, where the policyholder is a legal person if the establishment, to which the contract relates, is situated in Malta: Provided that, for the purposes

this paragraph, Malta shall include an exclusive economic zone area and environment protection area as defined in the Exclusive Economic Zone Act; "risk situated outside Malta" means a risk which is not a risk situated in Malta; "subsidiary" has the same meaning as is assigned to the term "subsidiary undertaking" by the Companies Act; "Solvency II Directive" means Directive 2009/138/EC

the European Parliament and

the Council

25 November 2009 on t he taki ng -u p and pu rsui t

t he b usi ness o f In surance and Reinsurance (Solvency II) (recast), as amended from time to time, and includes any delegated acts and any technical standards that have been or may be issued thereunder; "technical provisions" shall be construed in accordance with article 18E; "third country insurance undertaking" means an undertaking, other than a European insurance undertaking, which would require authorisation as an authorised insurance undertaking pursuant to article 7 as if its head

fice were situated in Malta; "third country reinsurance undertaking" means an undertaking, other than a European reinsurance undertaking, which would require authorisation as an authorised reinsurance undertaking in accordance with article 7 as if its head

fice were situated in Malta; "undertaking" refers to an undertaking whose head

fice is in Malta or in a country outside Malta; "undertaking whose head

fice is in Malta" means a limited liability company formed and registered in Malta in accordance with the Companies Act; "working days" shall not include Saturdays and the days referred to in the National Holidays and Other Public Holidays Act. Scope.

(2)The objective

this Act is, in part, to transpose and implement the provisions

: (

  1. a)the Solvency II Directive; (
  2. b)the Omnibus II Directive: Directive 2014/51/EU

the European Parliament and

the Council

16 April INSURANCE BUSINESS 2014 amending Directives 2003/71/EC and 2009/138/ EC and Regulations (EC) No 1060/2009, (EU) No 1094/2010 and (EU) No 1095/2010 in respect

the powers

the European Supervisory Authority (European Insurance and Occupational Pensions Authority) and the European Supervisory Authority (European Securities and Markets Authority); (c) Directive 2009/103/EC

the European Parliament and

the Council

16 September 2009, relating to insurance against civil liability in respect

the use

motor vehicles, and the enforcement

the obligation to insure against such liability, as amended from time to time; and (d) any other European Union Directives and Regulations that may be issued and amended from time to time relating to the regulation

and the prudential requirements applicable to insurance and reinsurance undertakings, and consequently this Act and any regulations and Insurance Rules issued thereunder shall be interpreted and applied accordingly.

(3)In this Act and in any regulations made thereunder, if there is any conflict between the English and the Maltese texts, the English text shall prevail. PART II SUPERVISION

BUSINESS

INSURANCE 3. It shall be the duty

the competent authority to carry out the functions assigned to it by or under this Act and any regulations, Insurance Rules or Conduct

Business Rules made thereunder and to ensure that insurance and reinsurance undertakings carrying on the business

insurance in or from Malta comply with the provisions

this Act and

any regulations made thereunder, with any Insurance Rules and Conduct

Business Rules made and directives issued by the competent authority in virtue

this Act and

any regulations made thereunder and with the conditions specified in their respective authorisation. Competent authority. Amended by: XVII. 2002.237. Substituted by: XII. 2006.77; X. 2011.75. Amended by: XXXIII. 2015.5; XXVI.2018.62. 4.

(1)When carrying out its functions under this Act, the competent authority shall, in particular, have regard to: Powers and duties

the competent authority. Amended by: XVII. 2002.238; XII. 2006.78; X. 2011.76; XX. 2013.

  1. Substituted by: XXXIII. 2015.
  2. Amended by: XXVI.2018.
  3. (a) the protection

insured persons, policy holders, beneficiaries and the general public; (b) the protection

the reputation

Malta, taking into account Malta's international commitments; and (c) the promotion

competition and choice.

(2)Without prejudice to the generality

the foregoing, the competent authority shall, in the exercise

its duties, take into account the convergence in respect

supervisory tools and supervisory practices in the application

this Act, and

the regulations and Insurance Rules made thereunder, pursuant to the Solvency II Directive.

(3)INSURANCE BUSINESS For the purpose

sub-article

(2): (a) the competent authority shall participate in the activities

EIOPA; (b) the competent authority shall comply with the guidelines and recommendations issued by EIOPA in accordance with Article 16

Regulation (EU) No 1094/2010 and, if not, shall state the reasons for not doing so; and (c) national mandates conferred on the competent authority shall not inhibit the performance

its duties under this Act or as a member

EIOPA.

(4)The competent authority may make Insurance Rules and Conduct

Business Rules as may be required for carrying into effect any

the provisions

this Act and

any regulations made thereunder. The competent authority may amend or revoke such Insurance Rules and, Conduct

Business Rules, and any amendment or revocation thereof, shall be

ficially communicated to the persons concerned.

(5)The competent authority may make, amend or revoke, Insurance Rules and Conduct

Business Rules, as may be required for the purpose

implementing any guidelines, recommendations issued by EIOPA under Article 16

Regulation (EU) No 1094/2010, for the implementation

the Solvency II Directive.

(6)Insurance Rules shall be binding on authorised insurance and reinsurance undertakings and others as may be specified therein. Conduct

Business Rules shall be binding on authorised insurance undertakings and others as may be specified therein. PART III AUTHORISATION FOR CARRYING ON BUSINESS

INSURANCE Classification

business

insurance and ancillary risks. Amended by: XVII. 2002.239; XII. 2006.79; XXXIII. 2015.7, 77. 5.

(1)Subject to the provisions

sub-article

(2), for the purposes

this Act, business

insurance is divided into long term business and general business; and "long term business" means business

insurance

any

the classes specified in the Second Schedule, and "general business" means business

insurance

any

the classes specified in Part I

the Third Schedule.

(2)An authorised insurance undertaking which has obtained an authorisation for a principal risk belonging to one class or group

classes as specified in the Third Schedule may also insure risks included in another class in the said Schedule without the need to obtain authorisation in respect

such risks provided that the risks fulfil all the following conditions: (

  1. a)they are connected with the principal risk; (
  2. b)they concern the object which is covered against the principal risk; and (
  3. c)they are covered by the contract insuring the principal INSURANCE BUSINESS risk.

(3)Notwithstanding the provisions

sub-article

(2), the risks included in classes 14, 15 and 17 in Part I

the Third Schedule shall not be regarded as risks ancillary to other classes: Provided that, legal expenses insurance as set out in class 17 may be regarded as a risk ancillary to class 18, where the conditions laid down in sub-article

(2)and either

the following conditions are fulfilled: (

  1. a)the main risk relates solely to the assistance provided for persons who fall into difficulties while travelling, while away from the home or their habitual residence; or (
  2. b)the insurance concerns disputes or risks arising out

, or in connection with, the use

sea-going vessels.

(4)For the purposes

this article, a contract

insurance is to be treated as falling within the Second Schedule, notwithstanding the fact that it contains related and subsidiary provisions within general business class 1 or 2

Part I

the Third Schedule to the Act, if its principal object is that

a contract falling within the Second Schedule to the Act and if such contract is effected or carried out by an undertaking authorised under article 7 to carry on long term business class 1.

(5)The competent authority may, by an Insurance Rules made for the purposes

this article, provide that general business contracts

insurance

a kind specified in the Insurance Rules, contain such conditions or include such requirements or arrangements as may be determined by such Insurance Rules. 6.

(1)No person shall carry on, nor hold itself out as carrying on, in or from Malta business

insurance unless authorised by the competent authority.

(2)Sub-article
(1)shall not apply to a European insurance undertaking and a European reinsurance undertaking establishing a branch or providing services in Malta in exercise

a European right.

(3)The Minister, acting on the advice

the competent authority, may make regulations under this article (a) declaring certain services and activities ancillary to or connected with business

insurance as not constituting business

insurance for any or all

the purposes

this Act; (

  1. b)prescribing the persons who may carry out such services and activities and the persons to or for whom such services and activities may be rendered; (
  2. c)providing for any matter incidental to or connected with the above, and for the better carrying out

the provisions

this sub-article.

(4)In the event

a doubt as to whether an activity constitutes business

insurance, or whether business

insurance is or is not Restriction on carrying on business

insurance. Amended by: XVII. 2002.240; XII. 2006.80; XXXIII. 2015.8. INSURANCE BUSINESS being carried on in or from Malta, the matter shall be conclusively determined by the competent authority. Authorisation by competent authority for carrying on business

insurance. Amended by: XVII. 2002.241; XXXIII. 2015.9. 7.

(1)The competent authority may authorise an undertaking to carry on under this Act (a) in the case

an undertaking whose head

fice is in Malta, in or from Malta or in or from a country outside Malta; (b) in the case

a third country insurance undertaking or a third country reinsurance undertaking, in or from Malta, such

the classes

business

insurance specified in the Second or Third Schedule, or such parts

those classes, as may be specified in the authorisation.

(2)An authorisation under this article may be restricted to business

reinsurance; and an undertaking may not carry on business

reinsurance by virtue

an authorisation under this article unless the authorisation expressly extends to such business.

(3)An authorisation issued under this article shall entitle an undertaking whose head

fice is in Malta to carry on business

insurance in a Member State or EEA State, in exercise

a European right, subject to a notification to the competent authority as determined in accordance with regulations made under article 64.

(4)Without prejudice to article 5, an authorisation under this article shall also be required if an undertaking, which holds an authorisation to carry on business

insurance or reinsurance in a class or classes

insurance, intends to extend its business to a class or to classes

business other than those classes for which it is already authorised.

(5)The competent authority shall have the power to require any undertaking to provide such information as it may deem necessary for the purpose

determining an application for authorisation.

(6)An authorisation under this article shall only be issued if the competent authority is satisfied, on the basis

the information required to be submitted under this Act and any information received by it, that the authorisation ought to be granted.

(7)An authorisation issued under this article may identify classes or part classes

general business by referring to the appropriate groups specified in Part II

the Third Schedule.

(8)Subject to the provisions

this Act, the competent authority may subject an authorisation issued or held under this article to such conditions as it may from time to time deem fit to impose.

(9)Subject to sub-article
(10), the competent authority shall determine an application for authorisation under this article within six months

receiving a properly completed application form together with the requisite documentation required to be submitted INSURANCE BUSINESS under this Act; and if it refuses to issue the authorisation it shall inform the applicant in writing

the reasons for the refusal.

(10)Where the authorisation sought is one restricted to reinsurance, the period prescribed by sub-article
(9)shall be

three months.

(11)The competent authority shall not consider the economic needs

the market as a criterion when examining an application for an authorisation.

(12)On the issue to an undertaking

an authorisation under this article, any previous authorisation

that undertaking under this article shall lapse.

(13)The competent authority shall notify EIOPA

every authorisation issued in terms

this article. 8.

(1)The competent authority shall not authorisation under article 7 unless it is satisfied that - issue an (
  1. a)an application for authorisation is made in writing by an undertaking in such form and manner as the competent authority may from time to time determine; (
  2. b)(
  3. i)in the case

an undertaking which intends to carry on business not restricted to reinsurance, the undertaking’s objects are limited to business

insurance and operations arising directly therefrom, to the exclusion

all other commercial business; (ii) in the case

an undertaking which intends to carry on business restricted to reinsurance, the undertaking’s objects are limited to the business

reinsurance and related operations; this may include a holding company function and activities with respect to financial sector activities within the meaning

Article 2

(8)

Directive 2002/87/EC

the European Parliament and

the Council

16 December 2002 on the supplementary supervision

credit institutions, insurance undertakings and investment firms in a financial conglomerate and amending Council Directives 73/239/EEC, 79/ 267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC and 93/22/EEC, and Directives 98/78/EC and 2000/ 12/EC

the European Parliament and

the Council, as amended from time to time; (c) the undertaking has disclosed to the satisfaction

the competent authority such information as the competent authority has requested

it in relation to persons who will, upon the authorisation

the undertaking, have any proprietary, financial or other interest in, or in connection with, that undertaking; (d) the undertaking has disclosed the identities

the shareholders, direct or indirect, whether natural or Authorisation requirements. Amended by: XVII. 2002.242; XII. 2006.81; L.N. 426

  1. Substituted by: XXXIII. 2015.
  2. INSURANCE BUSINESS legal persons who will have qualifying holdings in that undertaking and the amounts

those holdings; (e) all qualifying shareholders, directors, controllers and all persons who will effectively direct or manage the business

insurance are fit and proper persons to ensure the sound and prudent management

the undertaking; (f) the undertaking has submitted to the satisfaction

the competent authority a scheme

operations which shall include the particulars or proof as may be determined by Insurance Rules made for the purpose

this article; (g) the undertaking holds eligible basic own funds to cover the absolute floor

the Minimum Capital Requirement in accordance with article 17; (

  1. h)the undertaking shows evidence that it will be in a position to hold eligible own funds to cover the Solvency Capital Requirement, in accordance with article 15, going forward; (
  2. i)the undertaking shows evidence that it will be in a position to hold eligible basic own funds to cover the Minimum Capital Requirement, in accordance with article 17, going forward; (
  3. j)the undertaking shows evidence that it will be in a position to comply with the system

governance provided for in article 18I.

(2)Without prejudice to article 5, an undertaking seeking authorisation to extend its business

insurance to other classes or t o exten d an au thorisation covering o nly so me o f t he ri sk s pertaining to one class shall be required to: (a) submit a scheme

operations referred to in subarticle

(1)(f); (b) submit proof that it possesses eligible own funds to cover the Solvency Capital Requirement and Minimum Capital Requirement in accordance with articles 15 and 17 respectively.
(3)The competent authority shall not issue an authorisation under article 7, where close links exist between an undertaking applying for authorisation and any other natural or legal persons: (
  1. a)if it considers that such close links prevent it from effectively exercising its supervisory functions; and (
  2. b)if it considers that the laws, regulations or administrative provisions

a third country governing any one or more natural or legal persons with whom the undertaking has close links or difficulties involved in the enforcement

those measures, prevent it from effectively exercising its supervisory functions.

(4)For the purpose

ensuring compliance with the provisions

sub -article

(3)(a), the competent authority shal l require INSURANCE BUSINESS authorised insurance and reinsurance undertakings to provide it with the information necessary for it to monitor compliance with the conditions referred to in sub-article
(3)(a) on a continuous basis. 9.
(1)Subject to sub-articles
(2)and
(3), the competent authority shall not, under article 7, authorise an undertaking with its head

fice in Malta to carry on both long term business and general business.

(2)Without prejudice to the provisions

sub-article

(1)(a) an insurance undertaking authorised to carry on long term business may be granted an authorisation to carry on general business for the risks listed in classes 1 and 2

Part I

the Third Schedule; or (b) an insurance undertaking authorised solely to carry on general business

insurance for the risks listed in classes 1 and 2

Part I

the Third Schedule may be granted authorisation to carry on long term business; or (c) an insurance undertaking authorised solely to carry on general business

insurance may be granted authorisation to carry on long term business restricted to reinsurance.

(3)Without prejudice to the provisions

sub-article

(4), the provisions

this article shall not apply to an undertaking which holds an authorisation to carry on both long term business and general business under this Act as in force immediately before the coming into force

this Act.

(4)An undertaking authorised as aforesaid shall, in respect

long term business and general business, be managed separately in a manner as may be determined by Insurance Rules made for the purpose

this article.

(5)An authorised insurance undertaking carrying on long term business and seeking authorisation to extend its business to the risks listed in classes 1 or 2

Part I

the Third Schedule shall submit proof to the satisfaction

the competent authority that it: (a) possesses the eligible basic own funds to cover the absolute floor

the Minimum Capital Requirement for undertakings authorised to carry on long term business and the absolute floor

the Minimum Capital Requirement for undertakings authorised to carry on general business, in accordance with article 17; and (b) undertakes to cover the minimum financial obligations as determined in accordance with Insurance Rules, going forward.

(6)An authorised insurance undertaking carrying on general business for the risks listed in classes 1 or 2

Part 1

the Third Schedule and seeking authorisation to extend its business to long term business shall submit proof to the competent authority that it: Combination

long term business and general business. Amended by: XVII. 2002.243; XII. 2006.82; XXXIII. 2015.11, 77. INSURANCE BUSINESS (a) possesses the eligible basic own funds to cover the absolute floor

the Minimum Capital Requirement for undertakings authorised to carry on long term business and the absolute floor

the Minimum Capital Requirement for undertakings authorised to carry on general business, in accordance with article 17; (b) undertakes to cover the minimum financial obligations as determined in accordance with Insurance Rules, going forward.

(7)For the avoidance

doubt, an undertaking whose business is restricted to reinsurance, may be granted an authorisation to carry on both general and long term business in all classes

business. Applicants with head

fice in Malta. Amended by: XVII. 2002.244; XIII. 2004.111; XII. 2006.83; XXXIII. 2015.12. 10.

(1)The competent authority shall not issue an authorisation under article 7 to an undertaking whose head

fice is in Malta, nor shall the competent authority permit such undertaking to hold the authorisation issued thereunder, unless it is satisfied that the undertaking has fulfilled or complied with the requirements

article 8 and, where appropriate,

article 9.

(2)An undertaking authorised as aforesaid may, with the approval

the competent authority given in writing (

  1. a)open a branch in Malta; (
  2. b)appoint: (
  3. i)an insurance manager; or (
  4. ii)an insurance agent; or (iii) both an insurance manager and an insurance agent.

(3)Except with the written consent

the competent authority, no undertaking authorised as aforesaid shall carry on, nor hold itself out as carrying on business

insurance in or from a country outside Malta or open a branch, agency or

fice or set up or acquire any subsidiary in any country outside Malta. Applicants with head

fice outside Malta. Amended by: XVII. 2002.245; XII. 2006.84; XX. 2007.

  1. Substituted by: XXXIII. 2015.
  2. Amended by: XXVI.2018.
  3. 11.

(1)The competent authority shall not issue an authorisation under article 7 to a third country insurance undertaking or third country reinsurance undertaking, nor shall the competent authority permit such undertaking to hold the authorisation issued thereunder, unless the undertaking (a) is permitted in the country where its head

fice is situated to carry on the business

insurance which forms the object

the application; (

  1. b)has in Malta at all times: (
  2. i)a general representative requirements

article 12; and (

  1. ii)a branch; fulfilling the (
  2. c)undertakes to set up at the place

management

the branch, accounts specific to the business

insurance INSURANCE BUSINESS which it carries on in Malta, and to maintain there all the records relating to the business carried on; (

  1. d)undertakes to cover the Solvency Capital Requirement and the Minimum Capital Requirement in accordance with the requirements referred to in articles 15 and 17; (
  2. e)submits a scheme

operations in accordance with article 8

(1)(f); and (f) fulfils the governance requirements referred to in article 18I.
(2)In relation to a branch

a third country insurance undertaking or third country reinsurance undertaking, the business

insurance shall be carried on under the management

a person fulfilling the following requirements

this sub-article: (a) the person must be an individual resident in Malta or an insurance manager who has been designated by the undertaking for the purpose

this article; (b) the person must not be the approved auditor, or a partner or an employee

the approved auditor,

the undertaking; (c) the person possesses the qualifications and fulfils or complies with the requirements determined by Insurance Rules made for the purpose

this article; and (d) the person is fit and proper to ensure its sound and prudent management.

(3)A third country insurance or reinsurance undertaking shall be required to: (
  1. a)establish adequate technical provisions to cover the insurance and reinsurance obligations arising from the business carried out by the branch in Malta, calculated in accordance with Insurance Rules; and (
  2. b)value assets and liabilities and determine own funds in accordance with Insurance Rules.
(4)A third country insurance and reinsurance undertaking shall be required to maintain in Malta at all times an amount

eligible own funds consisting

the items determined in accordance with Insurance Rules and deposit a specified proportion

such own funds as may be prescribed under article 18G.

(5)(a) Branches

third country insurance undertakings shall not simultaneously pursue long term business and general business in Malta. (b) For the avoidance

doubt, a branch

a third country reinsurance undertaking may be granted an authorisation to carry on both general and long term business, in all classes

business, restricted to reinsurance.

(6)For the purposes

this article, "branch" means a permanent presence in Malta

a third country insurance INSURANCE BUSINESS undertaking or third country reinsurance undertaking, which has received authorisation in Malta to carry on business

insurance in Malta.

(7)The provisions

this article shall be without prejudice to any agreements concluded by the European Community with one or more third countries in terms

Article 171

the Solvency II Directive. General representatives. Amended by: XIII. 2004.112; XXXIII. 2015.14. 12.

(1)The requirements referred to in article 11
(1)(b)(i) are those set out in the following provisions

this article: (a) the representative must be a person resident in Malta who has been designated as the undertaking’s representative for the purpose

this article; (b) the representative must be authorised to act generally, and to accept service

any document, on behalf

the undertaking; (c) the representative must not be the approved auditor, or a partner or an employee

the approved auditor,

the undertaking; (d) if the representative is not an individual, it must be a company whose head

fice is in Malta and must itself have an individual representative resident in Malta who is authorised to act generally, and to accept service

any document, on behalf

the company, in its capacity as representative

the company.

(2)Without prejudice to the provisions

sub-article

(1), the general representative shall not be personally liable for the debts and obligations

the undertaking referred to in article

  1. Insurance agents and managers. Substituted by: XXXIII. 2015.
  2. Own funds

authorised insurance and reinsurance undertakings.. Amended by: XIII. 2004.113; XII. 2006.86; XX. 2007.

  1. Substituted by: XXXIII. 2015.
  2. Deleted by XII. 2006.
  3. PART IV CONDITIONS FOR CARRYING ON BUSINESS

INSURANCE Title I: Financial Requirements 14.

(1)The own funds

an authorised insurance and reinsurance undertaking shall comprise the sum

basic own funds and ancillary own funds.

(2)The amounts

ancillary own fund items to be taken into account when determining own funds shall be subject to the prior written approval

the competent authority.

(3)The competent authority shall issue Insurance Rules to determine the items making up the basic own funds and ancillary own funds, determine what constitutes surplus funds, provide for the classification

own funds into tiers and the eligibility

the own funds, and any other matter relating thereto. INSURANCE BUSINESS 15.

(1)An authorised insurance and reinsurance undertaking shall hold eligible own funds covering the Solvency Capital Requirement.
(2)The Solvency Capital Requirement shall be calculated either in accordance with the standard formula as set out in Insurance Rules or using a full or partial internal model as approved by the competent authority. The process for the approval

the use

an internal model shall be set out in Insurance Rules. Solvency Capital Requirement. Amended by: XII. 2006.87. Substituted by: XXXIII. 2015.15.

(3)Where it is inappropriate for an authorised insurance or r e i n s u r a n ce u n d e r t a k i n g t o c a l c u l a t e t h e S o l v e n c y C a p i t al Requirement in accordance with the standard formula, as set out in the Insurance Rules since the risk profile

the undertaking concerned deviates significantly from the assumptions underlying the standard formula calculation, the competent authority may, by means

a decision stating the reasons, require the undertaking concerned to use an internal model to calculate the Solvency Capital Requirement, or the relevant risk modules thereof. 16.

(1)An authorised insurance or reinsurance undertaking which fails to comply with article 15 shall immediately inform the competent authority as soon as it observes that the Solvency Capital Requirement is no longer complied with, or where there is a risk

non-compliance in the following three months.

(2)Within two months from the observation

non-compliance with the Solvency Capital Requirement, the authorised insurance or reinsurance undertaking shall submit a realistic recovery plan in accordance with Insurance Rules issued under article 18A for approval by the competent authority.

(3)The competent authority shall require the undertaking concerned to take the necessary measures to achieve, within six months from the observation

non-compliance with the Solvency Capital Requirement, the re-establishment

the level

eligible own funds covering the Solvency Capital Requirement or the reduction

the risk profile

the undertaking to ensure compliance with the Solvency Capital Requirement.

(4)The competent authority may, if appropriate, extend that period by three months.
(5)The competent authority may issue Insurance Rules to determine the circumstances within which the period set out in subarticle
(4)may be extended and the requirements to be complied with by the authorised insurance and reinsurance undertakings in such circumstances.
(6)In exceptional circumstances, where the competent authority is

the opinion that the financial situation

the authorised insurance or reinsurance undertaking concerned will deteriorate further, it may also restrict or prohibit the free disposal

the assets

that undertaking.

(7)Where the competent authority decides to restrict or prohibit the free disposal

the assets

that undertaking, it shall inform the European regulatory authorities

the host Member Non-Compliance with the Solvency Capital Requirement. Amended by: XVII. 2002.246; XIII. 2004.114; XII. 2006.

  1. Substituted by: XXXIII. 2015.
  2. INSURANCE BUSINESS States or the overseas regulatory authorities

any measures it has taken. The competent authority may request those authorities concerned to take the same measures, and shall designate the assets to be covered by such measures. Minimum Capital Requirement. Amended by: XVII. 2002.247; XII. 2006.89. Substituted by: XXXIII. 2015.15. 17.

(1)An authorised insurance and reinsurance undertaking shall hold eligible basic own funds to cover the Minimum Capital Requirement. Non-Compliance with Minimum Capital Requirement. Substituted by: XXXIII. 2015.15. 18.
(1)An authorised insurance or reinsurance undertaking which fails to comply with article 17 shall immediately inform the competent authority where it observes that the Minimum Capital Requirement is no longer complied with or where there is a risk

non-compliance in the following three months.

(2)The Minimum Capital Requirement shall be calculated in accordance with Insurance Rules made for the purpose

this article, and shall be not less than the amounts (the absolute floor) as determined by the said Insurance Rules.

(2)Within one month from the observation

non-compliance with the Minimum Capital Requirement, the undertaking concerned shall submit, for approval by the competent authority, a short-term realistic finance scheme, in accordance with Insurance Rules issued under article 18A, to restore, within three months

that observation, the eligible basic own funds, at least to the level

the Minimum Capital Requirement or to reduce its risk profile to ensure compliance with the Minimum Capital Requirement.

(3)The competent authority may also restrict or prohibit the free disposal

the assets

the undertaking concerned.

(4)Where the competent authority decides to restrict or prohibit the free disposal

assets

the undertaking concerned, it shall inform the European regulatory authorities

the host Member State or the overseas regulatory authorities,

any measures it has taken. The competent authority may request those authorities concerned to take the same measures, and shall designate the assets to be covered by such measures. Recovery plan and finance scheme. Added by: XXXIII. 2015.

  1. 18A. The particulars to be provided in the recovery plan and the finance scheme required to be submitted pursuant to articles 16 and 18 shall be determined by Insurance Rules. Identification and notification procedures. Added by: XXXIII. 2015.
  2. 18B. An authorised insurance or reinsurance undertaking shall have procedures in place, including the use

early warning indicators, to identify deteriorating financial conditions and shall immediately notify the competent authority when such deterioration occurs. Powers

the competent authority in deteriorating financial conditions. Added by: XXXIII. 2015.15. 18C.

(1)Notwithstanding the provisions

articles 16 and 18 and without prejudice to any

the measures that may be taken by the competent authority pursuant to article 28, where the solvency position

the authorised insurance or reinsurance undertaking continues to deteriorate, the competent authority shall have the power to take all measures necessary to safeguard the interests

INSURANCE BUSINESS policyholders, in the case

contracts

insurance, or the obligations arising out

contracts

reinsurance.

(2)In considering the measures to be taken, the competent authority shall take into account the level and duration

the deterioration

the solvency position

the undertaking concerned. 18D. Authorised insurance and reinsurance undertakings shall value their assets and liabilities in accordance with Insurance Rules made for the purposes

this Act. Valuation

assets and liabilities. Added by: XXXIII. 2015.15. 18E.

(1)Authorised insurance and reinsurance undertakings shall establish and maintain technical provisions with respect to all

their insurance and reinsurance obligations towards policyholders and insureds

insurance or reinsurance contracts. Technical provisions.

(2)The value and calculation

technical provisions shall be determined in accordance with Insurance Rules made for the purposes

this article.

(3)Without prejudice to anything contained in any other provisions under the Act, the competent authority may, whenever it deems it necessary, require the authorised insurance or reinsurance undertaking concerned to demonstrate the appropriateness

the level

the undertaking’s technical provisions, as well as, the applicability and relevance

the methods applied, and the adequacy

the underlying statistical data used.

(4)To the extent that the calculation

technical provisions

an authorised insurance or reinsurance undertaking does not comply with the Insurance Rules made for the purposes

this article, the competent authority may require the insurance or reinsurance undertaking concerned to increase the amount

technical provisions so that they correspond to the level determined by such Insurance Rules.

(5)Where an authorised insurance or reinsurance undertaking fails to comply with the provisions

this article, the competent authority may prohibit the free disposal

its assets after having communicated its intentions to the European regulatory authority

the host Member State or the overseas regulatory authority. The competent authority shall designate the assets to be covered by such measures. 18F.

(1)Without prejudice to the information which is to be submitted to the competent authority pursuant to article 32, an authorised insurance and reinsurance undertaking shall disclose publicly, on an annual basis, a report on the undertaking’s solvency and financial condition. The report shall contain the information determined by Insurance Rules made for the purposes

this article.

(2)The competent authority shall, upon a written request by an authorised insurance or reinsurance undertaking, permit an undertaking not to disclose information where: (a) by disclosing such information, the competitors

the Report on solvency and financial condition. Added by: XXXIII. 2015.15. INSURANCE BUSINESS undertaking concerned would gain significant undue advantage; (b) there are obligations to policyholders or other counterparty relationships binding the undertaking concerned to secrecy or confidentiality.

(3)Where non-disclosure

information is permitted by the competent authority, the authorised insurance or reinsurance undertaking concerned shall make a statement to this effect in its report on solvency and financial condition and shall state the reasons.

(4)The competent authority shall permit an authorised insurance or reinsurance undertaking to make use

or refer to public disclosures made under other legal or regulatory requirements, to the extent that those disclosures are equivalent to the information required to be submitted under sub-article

(1)in both their nature and scope.
(5)Where the reason for any permitted non-disclosure obtained pursuant to su b-article
(2)ceases to exist, the undertaking concerned shall inform the competent authority without undue delay and such undertaking shall comply with the obligations arising under sub-article
(1).
(6)In the event

any major development affecting si gn ifican tl y th e relev ance o f the i nforma tio n di sclo sed in accordance with this article, an authorised insurance or reinsurance undertaking shall disclose appropriate information on the nature a n d e ff e c t s o f t h a t m a j o r d ev el o p m e n t . T h e ci r c u m s t a n c e s considered as major developments and the disclosures to be made by the undertaking in such circumstances shall be determined by Insurance Rules. Custody

assets required to be maintained in Malta. Added by: XXXIII. 2015.15. Amended by: XXVI.2018.65.

(7)An authorised insurance and reinsurance undertaking may disclose, on a voluntary basis, any information or explanation related to their solvency and financial condition which is not already required to be disclosed in accordance with this article. 18G.
(1)The competent authority may, with respect to assets which an undertaking is required by or under this Act to maintain in Malta, impose an additional requirement that the whole or a specified proportion

such assets shall be deposited with and held in custody for the undertaking’s account by a person as may be prescribed by regulations made for the purposes

this article u nless t hat r equi rem ent is oth erw ise i mp osed by any ot her provision

this Act; and the competent authority shall at all times have the right to demand from such person any information it may require to ensure that the provisions

this article are being complied with.

(2)Any requirement by or under this Act that assets

any kind or amount are to be maintained in Malta shall be satisfied if such assets are maintained in such country outside Malta and in such form and manner to the satisfaction

the competent authority subject to such regulations as may be prescribed for such purpose under this Act. INSURANCE BUSINESS

(3)Any provision by or under this Act requiring an undertaking to maintain in Malta assets

any kind or amount may be satisfied by the undertaking if the undertaking produces a security in a form and manner to the satisfaction

the competent authority subject to such regulations as may be prescribed for such purpose under this Act.

(4)The assets required to be maintained in Malta by or under th is Act sh all n ot b e t r ansf er re d, w it hd ra wn o r in an y way encumbered without the permission

the competent authority given in writing or until the undertaking has ceased to carry on the business it was authorised to carry on and proves to the satisfaction

the authority that it has no further liability. Such assets shall not be attachable by any court. Title II: Governance Substituted by: XXVI.2018.66. 18H. The Board

Directors

an authorised insurance or reinsurance undertaking shall be ultimately responsible for the compliance by the undertaking concerned with the Act, regulations, Insurance Rules and where applicable, Conduct

Business Rules issued thereunder, including any other obligations pursuant to the Solvency II Directive. 18I.

(1)Authorised insurance and reinsurance undertakings shall be required to have in place an effective system

governance which provides for sound and prudent management

the business

the undertaking. The system

governance requirements shall be laid down in Insurance Rules. Responsibility

the Board

Directors. Added by: XXXIII. 2015.15. Amended by: XXVI.2018.67.

(2)An authorised insurance and reinsurance undertaking shall: (
  1. a)ensure that all persons who effectively run the undertaking or have other key functions, at all times, satisfy the fit and proper criteria; (
  2. b)have in place an effective risk management system, including a risk management function; (
  3. c)as part

its risk management system, conduct its own risk and solvency assessment; (

  1. d)have in place an effective internal control system, which shall include a compliance function; (
  2. e)provide for an effective internal audit function; (
  3. f)provide for an effective actuarial function; and (
  4. g)if it outsources any

its functions or any insurance or reinsurance activities, remain fully responsible for discharging all

its obligations under this Act.

(3)The systems and functions referred to in sub-article
(2)shall be determined by Insurance Rules.
(4)The system

governance shall be proportionate to the nature, scale and complexity

the operations

the authorised insurance or reinsurance undertaking. PART V System

governance. Added by: XXXIII. 2015.15. INSURANCE BUSINESS ACCOUNTS, ACTUARIAL INVESTIGATIONS AND FINANCIAL STATEMENTS Financial year

authorised undertakings. Amended by: XXXIII. 2015.16. 19.

(1)Every undertaking whose head

fice is in Malta applying for authorisation under article 7

this Act to carry on business

insurance in or from Malta shall notify in writing the competent authority

its financial year; and, failing such notice, the undertaking’s financial year shall terminate on the thirty-first day

December

each year.

(2)No undertaking as aforesaid shall alter its financial year unless and until the competent authority has given its approval in writing on an application made to it in that behalf.
(3)Every third country insurance or reinsurance undertaking applying for authorisation under article 7 to carry on business

insurance in or from Malta, shall notify in writing the competent authority

its financial year; and where an authorised undertaking as aforesaid alters its financial year it shall forthwith notify in writing the competent authority

such change.

(4)For the purposes

this Act, financial year (a) in relation to an authorised undertaking whose head

fice is in Malta, means an accounting period as is construed in accordance with articles 164 to 166

the Companies Act; (b) in relation to a third country insurance or reinsurance undertaking, means an accounting period as is construed in accordance with the provisions

the laws

the country where the head

fice

the undertaking is situated governing the accounting period

such undertakings. Drawing up and publication

audited financial statement. Amended by: XVII. 2002.248; XII. 2006.90; XX. 2007.129; XXXIII. 2015.17. 20.

(1)Subject to the following sub-articles, every undertaking authorised under this Act shall, within the period stipulated by regulations made or Insurance Rules issued under article 32 or at any other time as may be authorised in writing by the competent authority (a) forward to the competent authority; and (b) exhibit in a conspicuous position in each

its

fices, agencies and branches in Malta and keep so exhibited throughout the following twelve months, a copy

its audited financial statements drawn up (i) in the case

an undertaking whose head

fice is in Malta, in accordance with Insurance Rules made for the purposes

this article; and (ii) in the case

a third country insurance or reinsurance undertaking, in accordance with the provisions

the laws

the country where the head

fice

the undertaking is situated governing the financial statements

such undertakings. (1A) The undertaking shall provide a copy

its audited INSURANCE BUSINESS financial statements to any person applying for such copy: Provided that the undertaking may charge such reasonable fees not exceeding the administrative costs incurred in producing such copy.

(2)In the case

an undertaking whose head

fice is in Malta, sub-article

(1)(b) shall apply as respects the undertaking’s

fices, agencies and branches in a country outside Malta in the same manner and to the same extent as it applies to its

fices, agencies and branches in Malta.

(3)The audited financial statements shall be drawn up and pu bl ish ed in su ch m ann er an d form as m ay b e specified in Insurance Rules. 21.
(1)Every undertaking authorised under this Act shall every year appoint an approved auditor as auditor to the un de rt ak in g wh o se d u ty sh al l be t o rep ort o n th e fi n anc ial statements

the undertaking examined by him and on financial statements prepared by the undertaking.

(2)If an authorised undertaking fails to appoint an auditor as required by sub-article
(1), or at any time fails to fill any vacancy in the

fice

auditor, the competent authority shall have the power to appoint an auditor for that undertaking and shall fix the remuneration to be paid by that undertaking to such auditor.

(3)The auditor’s report shall include a statement on compliance by the enrolled person with requirements specified by means

Insurance Rules made for the purposes

this article, which may also specify the information to be contained in such statement.

(4)Every auditor

an authorised undertaking shall have the right to demand such information or explanation as he deems necessary in the performance

his duties from any

ficer or employee

, or any person under an appointment from, that undertaking.

(5)An auditor shall immediately give notice in writing to the competent authority if (
  1. a)he resigns; (
  2. b)he does not seek to be re-appointed; or (
  3. c)he decides to qualify the audit report, and, in the case

a resignation, the auditor shall specify the reasons for so doing.

(6)An authorised undertaking shall give notice in writing to the competent authority immediately it receives notice

a resolution intended to be put before the undertaking’s annual general meeting to appoint as an auditor a person other than the retiring auditor or otherwise providing expressly that the retiring auditor shall not be reappointed.

(7)Where, for any reason whatever, the appointment

an auditor comes to an end, the authorised undertaking shall, not later than fourteen days from the termination

such appointment, give Appointment, duties and termination

appointment

auditors. Amended by: XII. 2006.91; XXXIII.2015.18,77 XXVI.2018.68. INSURANCE BUSINESS notice in writing to the competent authority stating reasons for such termination.

(8)The competent authority may require an authorised undertaking to change its appointed auditor where, in the competent authority’s opinion, such auditor is considered unfit for this appointment, at any time during his term

fice.

(9)Before requiring an authorised undertaking to change its appointed auditor in the circumstances mentioned in sub-article
(8), the competent authority shall notify in writing its intention to the undertaking and the auditor concerned stating reasons for requiring such change and giving the auditor the opportunity to submit in writing within fourteen days from the date

serving

such notice reason why its appointment with the undertaking should not be terminated.

(10)For the purposes

this Act, an approved auditor shall be a person who is qualified to be an auditor in accordance with the Companies Act, and holds the authorisation

the competent authority issued to him in accordance with regulations made for the purpose

this article.

(11)Notwithstanding anything contained in the foregoing subarticles, the competent authority may, in the case

a third country insurance or reinsurance undertaking authorised as aforesaid, approve such alternative arrangements as it thinks reasonable and which do not materially detract from the main objects

this article, and where such arrangements have been carried out, the provisions

this article shall not apply to the extent that they are replaced by such arrangements. Appointment

actuary by an undertaking with long term business. Amended by: III. 2009.25; XXXIII. 2015.19.

(12)Subject to the provisions

sub-article

(10), in so far as the provisions

this article are inconsistent with the provisions

the Companies Act, the provisions

this article shall prevail, and the provisions

the said Act shall, to the extent

the inconsistency, not apply to authorised undertakings as aforesaid. 22.

(1)Every authorised insurance undertaking carrying on long term with-profits business in terms

classes I and III as specified in the Second Schedule shall (a) within thirty days

beginning to carry on such business, appoint an approved actuary as actuary to the undertaking to perform the with-profits actuary function in respect

the said classes

its withprofits business, (if any); (b) whenever the appointment comes to an end, within thirty days

such termination, make a new appointment.

(2)An undertaking making an appointment under sub-article
(1)shall, within fourteen days, inform the competent authority in writing stating that fact, the date

such appointment and the name and qualifications

the person appointed; and if an appointment under that sub-article comes to an end, the undertaking shall, within fourteen days, inform the authority in writing stating that INSURANCE BUSINESS fact, the name

the person concerned and the reasons for such termination.

(3)If, on the expiry

any period specified in sub-article

(1), the undertaking fails to make the required appointment, the undertaking shall not effect and carry out any new long term contracts

insurance in terms

the classes specified in subarticle

(1)until the appointment is made.
(4)Notwithstanding the provisions

sub-article

(2), the competent authority may, within fourteen days

receiving a notice

termination

an appointment

an approved actuary, request in writing the approved actuary concerned to give in writing the reasons for such termination; and the actuary shall, within fourteen days, give reasons in writing.

(5)For the purposes

this Act, an approved actuary is a person who (a) does not hold a role or perform a function on behalf

the undertaking which could give rise to a significant conflict

interest; (b) is a Fellow

an Institute

Actuaries, or a Fellow

a Faculty

Actuaries, or holds actuarial qualifications

similar standing

an institute

repute 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; and (c) holds the competent authority’s approval to act as actuary to perform the with-profits actuary function as set out in article 23. 23.

(1)Every authorised insurance undertaking carrying on long term with-profits business in terms

classes I and III as specified in the Second Schedule shall, at the close

its financial year, require the approved actuary to provide a report in respect

the period covered by the report affecting those classes

withprofits business

the undertaking.

(2)The information to be provided in the report shall be determined by Insurance Rules issued by the competent authority for the purposes

this article.

(3)The actuary’s report shall be forwarded by the undertaking concerned to the competent authority, together with the audited financial statements

the undertaking required to be forwarded under article 20.

(4)Notwithstanding anything contained in any

the foregoing sub-articles, in the case

a third country insurance undertaking authorised to carry on long term with-profits business in terms

classes I and III as specified in the Second Schedule, the competent authority may approve such alternative arrangements as it thinks reasonable and which do not materially detract from the main objects

this article, and where such arrangements have been carried out, the provisions

this article shall not apply to the extent that they are replaced by such arrangements. Periodic actuarial investigation

an undertaking with long term business. Amended by: XVII. 2002.249; XII. 2006.92; XXXIII. 2015.20. Obligations

auditors and actuaries to the competent authority. Amended by: XVII. 2002.

  1. Substituted by: XXXIII. 2015.
  2. INSURANCE BUSINESS 24.

(1)An auditor or an actuary

an authorised insurance or reinsurance undertaking or

a branch in Malta

a third country insurance or reinsurance undertaking shall have the duty to report immediately to the competent authority any fact or decision concerning that undertaking

which he becomes aware

in his capacity as auditor or actuary

any such authorised insurance or reinsurance undertaking or

any such branch which relates to any matter which may be prescribed or is likely to bring about the following: (a) a serious qualification, or refusal,

the auditor’s report on the accounts

the undertaking or the branch; or (b) a grave impairment

the undertaking’s ability to continue as a going concern; or (c) a material breach

the provisions

this Act, regulations or any Insurance Rules which lay down the conditions governing authorisation or which specifically govern the carrying on

business

insurance by an authorised undertaking or branch; or (

  1. d)non-compliance Requirement; or with the Solvency Capital (
  2. e)non-compliance Requirement. with the Minimum Capital

(2)The auditor or actuary, as the case may be, shall likewise have a duty to report to the competent authority any facts or decisions

which he becomes aware

in the course

carrying out his duties which relate to or have a serious adverse effect upon the insured, the policyholder or any other interested person relating to the undertaking or the branch in Malta

a third country insurance or reinsurance undertaking

which he becomes aware

in his capacity as auditor or actuary to an undertaking having close links with an authorised insurance or reinsurance undertaking.

(3)Without prejudice to any provision contained in this Act, the competent authority may request the auditor or the actuary, as the case may be, to provide it with such information and documentation relating to any fact or decision as specified in subarticles
(1)or
(2)concerning the authorised insurance or reinsurance undertaking or branch in Malta

a third country insurance or reinsurance undertaking. PART VI POWERS

INTERVENTION Automatic revocation

an authorisation. Amended by: XXXIII. 2015.22. 25. An authorisation issued or held under this Act shall automatically be revoked if the authorised insurance or reinsurance undertaking (

  1. a)is declared bankrupt or goes into liquidation or makes a composition with its creditors or is otherwise dissolved; or INSURANCE BUSINESS (
  2. b)has ceased to operate as a result

a merger with another undertaking carrying on business

insurance or for any other reason whatsoever; or (c) is a third country insurance or reinsurance undertaking, and the overseas regulatory authority in the country

registration, incorporation or constitution withdraws the authorisation from the undertaking. 26. Without prejudice to anything contained in any other provision

this Act, the competent authority may at any time suspend or revoke an authorisation issued or held under this Act if (a) any document or information accompanying an application for authorisation, or any information given in connection therewith, is false, incorrect or misleading in any material particular, or if the authorised insurance or reinsurance undertaking has concealed, or conceals from, or fails to notify to the competent authority any document or information or change therein which it was its duty to reveal or to notify under this Act and any regulations, Insurance Rules or Conduct

Business Rules made thereunder; or (

  1. b)the authorised insurance or reinsurance undertaking ceases to carry on the business for which the authorisation was issued for more than six months; or (
  2. c)the authorised insurance or reinsurance undertaking suspends payment or is about to suspend payment; or (
  3. d)it considers that the authorised insurance or reinsurance undertaking does not fulfil or comply with the requirements

, or has contravened, any

the provisions

this Act and any regulations made thereunder, or any Insurance Rules or any applicable Conduct

Business Rules, or, or has failed to satisfy or comply with any condition to which it or the authorisation held by it is subject by virtue

or under this Act; or (e) it considers that any

the directors, the controllers and any other person who effectively directs the business the undertaking is authorised to carry on is no longer a fit and proper person to ensure its sound and prudent management; or (

  1. f)it receives a written request so to do from the authorised insurance or reinsurance undertaking; or (
  2. g)the authorised insurance or reinsurance undertaking does not commence to carry on business pursuant to the authorisation within twelve months

its issue; or (

  1. h)the authorised insurance or reinsurance undertaking no longer possesses sufficient own funds as determined in article 14; or (
  2. i)the authorised insurance or reinsurance undertaking Power

the competent authority to suspend or revoke an authorisation. Amended by: XVII. 2002.251; XII. 2006.93; XXXIII.2015.23,77 XXVI.2018.69. INSURANCE BUSINESS does not comply with the Minimum Capital Requirement and the competent authority considers that the finance scheme submitted is manifestly inadequate or the undertaking concerned fails to comply with the approved scheme within three months from the observation

non-compliance with the Minimum Capital Requirement; (

  1. j)the authorised insurance or reinsurance undertaking is likely to become unable to meet its obligations or can no longer be relied upon to fulfil or satisfy its obligations towards insureds, policyholders, creditors or other interested persons; or (
  2. k)close links exist between the authorised insurance or reinsurance undertaking and another person, and the competent authority is prevented from exercising its supervisory functions effectively either by reason

those close links or by reason

any law, regulation or administrative provision

a country outside Malta governing that other person, or by reason

difficulty in their enforcement; or (ka) the authorised insurance undertaking fails to comply with the conduct

business requirements in relation to the distribution

an insurance-based investment product or in relation to the distribution

any insurance product other than an insurance-based investment product, set out in Conduct

Business Rules; or (l) Notification

suspension or revocation

an authorisation. Amended by: XXXIII. 2015.24; V.2020.27. any

the circumstances under which the competent authority would have been precluded from issuing an authorisation under this Act, materialises itself or where under this Act it would have been entitled to refuse to issue such authorisation. 27.

(1)Subject to the following provisions

this article, where the competent authority intends to suspend or revoke an authorisation pursuant to article 26, it shall give the undertaking concerned notice in writing setting out the reasons for its intention to do so.

(2)Every notice given under sub-article
(1)shall state that the undertaking concerned may, within such reasonable period after the service thereof as may be stated in the notice (being a period

not less than forty-eight hours and not longer than thirty days), make representations in writing to the competent authority giving reasons why the authorisation should not be suspended or revoked and the competent authority shall consider any representations so made before arriving at a final decision.

(3)The competent authority shall notify in writing its final decision to the undertaking concerned.
(4)An authorisation issued to a third country insurance or reinsurance undertaking may only be revoked after consultation with the overseas regulatory authority

the country

registration, incorporation or constitution, unless the competent INSURANCE BUSINESS authority decides that the matter is urgent or that there are circumstances which make such prior consultation inappropriate.

(5)In the case

a suspension or a revocation

an authorisation

an undertaking whose head

fice is in Malta, the competent authority shall: (

  1. a)notify the European regulatory authorities accordingly in order to enable them to take appropriate measures to prevent the insurance or reinsurance undertaking from commencing new operations within their territories; (
  2. b)inform accordingly the overseas regulatory authority

any state in which the undertaking or its subsidiaries are carrying on the business

insurance.

(6)The competent authority shall notify EIOPA

any revocation

authorisation in terms

the Act. 28.

(1)Without prejudice to the powers conferred to the competent authority under article 26, the competent authority, may, where it is satisfied that sufficient serious circumstances exist, proceed to take any one or more

the following measures: (

  1. a)require the undertaking forthwith to take such steps as the competent authority may consider necessary to rectify or remedy the matter; (
  2. b)appoint a person to advise the undertaking in the proper conduct

its business; (c) restrict the free disposal

the assets

the authorised insurance undertaking, to safeguard the interests

the insured persons; (d) appoint a person to take charge

the assets

the undertaking, or any portion

them, for the purposes

safeguarding the interests

insureds, policyholders and legitimate creditors

the undertaking; (e) appoint a person to assume control

the business

the undertaking either to carry on that business or to carry out such other function or functions in respect

such business, or part thereof, including to take the necessary action for the undertaking to be dissolved and wound up, as the competent authority may direct; (f) issue an order for the dissolution and winding up

the undertaking or, in the case

a third country insurance or reinsurance undertaking, for the winding up

its business in Malta; (g) appoint a competent person to act as liquidator for the purpose

winding up the affairs

the undertaking; (

  1. h)fix the remuneration to be paid by the undertaking to any person appointed under this article; (
  2. i)do such other act or require the doing

such other thing as it may deem appropriate in the circumstances, and having proceeded in any one or more

the manners aforesaid, Power

the competent authority to protect the public interest. Amended by: XVII. 2002.252; XIII. 2004.115; XII. 2006.94; XXXIII. 2015.25; V.2020.43. INSURANCE BUSINESS the competent authority may further proceed in any one or more

such manners, whether in addition thereto or in substitution therefor.

(2)Where a person is appointed by the competent authority (a) under sub-article
(1)(b), it shall be the duty

the undertaking to act in accordance with the advice given by such person unless and until the competent authority, on representation made to it, directs otherwise; (b) under sub-article

(1)(d), the undertaking shall deliver to such person all the assets

which he is placed in charge, and all the powers, functions and duties

the undertaking in respect

those assets, whether exercisable by the undertaking in general meetings, or by the directors, or by any other person, including the legal and judicial representation

the undertaking, shall be exercisable by and vest in the person appointed under the said paragraph to the exclusion

any other person; (c) under sub-article

(1)(e), the undertaking shall submit its business to the control

such person and shall provide him with such facilities as he may require the undertaking to provide him to carry on that business or to carry out the functions assigned to him under the said paragraph; and all the powers, functions and duties

the undertaking, whether exercisable by the undertaking in general meeting, or by the directors, or by any other person, including for the purposes

the dissolution and winding up

the undertaking as well as the legal and judicial representation

the undertaking in all matters, shall be exercisable by and vest in him to the exclusion

any other person; (d) under sub-article

(1)(g) such person shall be the liquidator

the undertaking for all purposes

law to the exclusion

any other person: Provided that the competent person shall not take any decision for the purpose

the dissolution and winding up

the undertaking, unless the competent authority issues a directive to that effect in terms

article 31A

the Act, and any such directive may contain such instructions, requirements and conditions as the competent authority may consider necessary, including with regard to the mode

winding up. (2A) Without prejudice to the powers

the competent authority in terms

sub-article

(1), the competent authority may also submit an application to the court for the dissolution and winding up by the court

an undertaking, where it appears to the com petent authority that an undertaking should be dissolved and wound up by the court for the reason set out in article 214

(2)(b)(iii)

the Companies Act, and where the court accedes to the application, the relevant provisions

the Companies Act in relation to the INSURANCE BUSINESS dissolution and winding up by the court and any other applicable provisions

any other law shall apply.

(3)In the case

a third country insurance or reinsurance undertaking, the branches and

fices in Malta

that undertaking shall, if the competent authority so directs and to the extent it so directs, be deemed to constitute a separate undertaking.

(4)The provisions

article 16

(8)

the Malta Financial Services Authority Act shall apply mutatis mutandis to any administrative or disciplinary sanction or measure,

whatever type, including reprimands or warnings, imposed or decided by the competent authority under this Act, and any regulations made thereunder or any Insurance Rules.

(5)The competent authority may require the undertaking concerned to pay all the expenses

, and incidental to, the publication or issue

public statements or notices pursuant to this article or such part thereof as it may deem appropriate; and any sum so due shall be recoverable by the competent authority in the same manner as an administrative penalty imposed under this Act.

(6)Any measure adopted in terms

sub-article

(1)shall remain in force notwithstanding that an undertaking ceases to hold an authorisation licence for whatever reason, unless the competent authority otherwise directs. PART VII SUPERVISION

AUTHORISED INSURANCE AND REINSURANCE UNDERTAKINGS Substituted by: XXIII. 2015.26. 29.

(1)Without prejudice to anything contained in any other provision

this Act which requires an authorised insurance or reinsurance undertaking to furnish to the competent authority any information or documentation, the competent authority may, by notice in writing,require any such undertaking or any person who is or was carrying out business

insurance, or who appears to be or have been carrying on business

insurance, or who appears to be in possession

any relevant information and, or documentation to do all or any

the following: Power

the competent authority to require information. Amended by: XVII. 2002.253; XXIII. 2015.27; XXVI.2018.70. (

  1. a)to furnish to it, at such time and place and in such form as it may specify, such information and documentation as it may require including existing telephone and existing data traffic records, with respect to the business such undertaking is authorised to carry on; or with respect to any person with whom the undertaking has close links; (
  2. b)to furnish to it any information or documentation aforesaid verified in such manner and in such language, as it may specify; (
  3. c)to attend before it, or before a person appointed by it, at such time and place as it may specify, to answer questions and provide information and documentation with respect to any such business as aforesaid. INSURANCE BUSINESS

(2)The competent authority may take copies

any documents furnished or provided under this article or extracts from them.

(3)Where an authorised insurance or reinsurance undertaking required to provide information or documentation under this article does not have the relevant information or documentation, it shall disclose to the competent authority where, to the best

its knowledge, that information or documentation is, and the competent authority may require any person, including a person to which the undertaking has outsourced any activities or functions, whether indicated as aforesaid or not, who appears to it to be in possession

that information or documen-tation, to provide it.

(4)A statement made and documentation provided in pursuance

any requirement under this article may be used in evidence against the person making the statement or providing the documentation as well as against any person to whom they relate.

(5)The provisions

this article shall not apply to information or documentation which is privileged in accordance with the provisions

article 642

the Criminal Code.

(6)The power to require the production

documentation under the provisions

this article shall be without prejudice to any lien or charge claimed by any person in relation to such documentation. Power

the competent authority to examine the affairs

authorised undertakings and service providers. Amended by: XII. 2006.95; XXXIII. 2015.28; XXVI. 2018.71.

(7)Where the competent authority has appointed a person under sub-article
(1)(c), such person shall, for the purposes

carrying out his functions under his appointment, have all the powers conferred on the competent authority by this article and a requirement made by him shall be deemed to be and have the same force and effect as a requirement

the competent authority.

(8)Without prejudice to the other provisions

this article, an authorised insurance or reinsurance undertaking may be required by the competent authority to submit to the Central Bank

Malta such information as the Bank may reasonably require for the discharge

its duties under the Central Bank

Malta Act. 30.

(1)Without prejudice to the provisions

the Companies Act relating to the investigation

undertakings, the competent authority may, whenever it deems it necessary or expedient, appoint one or more inspectors to investigate and report on the affairs

an authorised insurance or reinsurance undertaking and to report thereon to it.

(2)An inspector appointed under sub-article
(1)(a) shall have and may exercise all the powers conferred on the competent authority by article 29, and any requirement made by him shall be deemed to be and have the same force and effect as a requirement

the competent authority; (b) may, and if so directed by the competent authority shall, make interim reports and on the conclusion

his examination shall make a final report to the said authority. INSURANCE BUSINESS

(3)The competent authority may forward to the authorised insurance or reinsurance undertaking concerned a copy

any report, or any part thereof, made by an inspector in respect

its affairs.

(4)Where the affairs

an authorised insurance or reinsurance undertaking are under examination, it shall be the duty

all

ficers and agents

the undertaking to produce to an inspector all books and documents

or relating to the undertaking and otherwise to give to an inspector all assistance in connection with the examination which they are reasonably able to give; and if an

ficer or an agent

the undertaking refuses to produce any books or documents which it is his duty under this article to produce, or refuses to answer any question which is put to him by an inspector with respect to the affairs

the undertaking, an inspector shall refer the matter to the competent authority and the competent authority shall thereupon enquire into the case and take appropriate action as it deems necessary.

(5)An inspector shall also be given access to any accounts, returns or other information relating to an authorised insurance or reinsurance undertaking whose affairs are under examination which are in the possession or under the control

the competent authority.

(6)Where the information relating to an authorised insurance or reinsurance undertaking is in any language other than Maltese or English, the competent authority or any inspector appointed by it, may require that such information be submitted in either the English or Maltese language.
(7)(a) Where an authorised insurance or reinsurance undertaking outsources a function or activity, the competent authority shall have effective access to the business premises

the service provider and must be able to exercise those rights

access. (b) Where the service provider is located in a Member State or EEA State, other than Malta, the competent authority shall inform the appropriate authority

the Member State or EEA State

the service provider prior to conducting an on-site inspection at the premises

the service provider. In the case

a nonsupervised entity, the appropriate authority shall be the European regulatory authority concerned. The competent authority may delegate such on-site inspections to the European regulatory authority

the Member State or EEA State where the service provider is located.

(8)Where the competent authority has informed the European regulatory authority that it intends to carry out an on-site inspection in accordance with sub-article
(7), or where it carries out an on-site inspection in accordance with the said sub-article, where the competent authority is unable in practice to exercise its right to carry out that on-site inspection, the competent authority may refer the matter to EIOPA and request its assistance in accordance with INSURANCE BUSINESS Article 19

Regulation (EU) No 1094/2010.

(9)The competent authority shall have the power to order that all expenses

, and incidental to, an examination pursuant to this article or such part thereof as it may deem appropriate, shall be paid by the undertaking concerned; and any sum so due shall be recoverable by the competent authority in the same manner as an administrative penalty imposed under this Act.

(10)In this article, any reference to

ficers or to agents shall include a reference to former as well as present

ficers or agents and the expression "agents", in relation to an authorised insurance or reinsurance undertaking, shall include persons registered or enrolled under the Insurance Distribution Act, or registered with an authority or body in the Member State or EEA State responsible for the supervision

intermediaries and ancillary insurance intermediaries acting for the undertaking, the bankers, the auditors and, in the case

an undertaking authorised to carry on long term business, the actuary

the undertaking and a person as may be prescribed by regulations made for the purposes

article 18G.

(11)The powers available to the competent authority pursuant to articles 29 to 31A with regard to authorised insurance and reinsurance undertakings shall also be available with regard to the outsourced activities

such undertakings.

(12)The provisions

sub-article

(7)shall apply mutatis mutandis where the service provider is located in a country outside Malta, which is not a Member State or EEA State. Right

entry to obtain information and documents. Amended by: XXXIII. 2015.29; V.2020.44. 31.

(1)Without prejudice to the provisions

the Companies Act, relating to the entry and search

premises, any

ficer, employee or agent

the competent authority, on producing, if required, evidence

his authority, may enter premises occupied by a person on whom a notice has been served under article 29 or whose affairs are being investigated under article 30, for the purpose

obtaining there the information or documents required by that notice, or otherwise for the purpose

the examination, and

exercising any

the powers conferred by the said articles.

(2)Where any

ficer, employee or agent

the competent authority has reasonable cause to believe that if such notice as is referred to in sub-article

(1)were served it would not be complied with or that any documents to which it could relate would be removed, tampered with or destroyed, such person may, on producing evidence

his authority, enter any premises referred to in sub-article

(1)for the purpose

obtaining there any information or documents specified in the notice, being information or documents that could have been required under such notice as is referred to in sub-article

(1).
(3)For the purposes

any action taken under the provisions

this article, the competent authority may request the assistance

the Commissioner

Police, who may for such purpose exercise such powers as are vested in him for the prevention

fences and the enforcement

law and order: Provided that, where an entry as is mentioned in this article INSURANCE BUSINESS involves premises that are occupied for the purpose

habitation, such entry shall be carried out in the presence

an

ficer

the Police

a rank not below that

inspector and shall moreover not take place between nine in the evening and five in the morning. 31A.

(1)Without prejudice to any

the powers conferred to it under this Act, the competent authority may, whenever it deems it necessary, give, by notice in writing, such directives as it may deem appropriate in the circumstances, and any person to whom or to which the notice is given shall obey, comply with and otherwise give effect to any such directive within the time and in the manner stated in the directive or any further directive: Power to issue directives. Added by: XII. 2006.96. Amended by: XXXIII. 2015.30; V.2020.45. Provided that the competent authority may give any such directive even where an undertaking, for whatever reason, ceases to hold an authorisation granted in terms

this Act: Provided further that any directive given in terms

this article shall, unless the competent authority otherwise directs, continue to apply even when an undertaking, for whatever reason, ceases to hold an authorisation granted in terms

this Act.

(2)Without prejudice to the generality

the foregoing provisions

this article, a directive under this article may – (

  1. a)require anything to be done or be omitted to be done, or impose any prohibition, restriction or limitation, or any other requirement, including any requirement emanating from European Union legislation, and confer powers, with respect to any transaction or other act, or to any assets, or to any other thing whatsoever; (
  2. b)require that any

ficer

an undertaking having functions in relation to the holder

an authorisation be prohibited, temporarily or otherwise, suspended from carrying out activities licensable under the Act, or removed, or removed and replaced, by another person acceptable to the competent authority.

(3)The power to give directives under this article shall include the power to vary, alter, add to or withdraw any directive, as well as the power to issue new or further directives.
(4)Where the competent authority is satisfied that the circumstances so warrant, it may at any time make public any directive it has given under any

the provisions

this article. 31B.

(1)The competent authority shall review and evaluate the strategies, processes and reporting procedures which are established by authorised undertakings to comply with this Act, regulations made and Insurance Rules issued thereunder. This review and evaluation shall comprise the assessment

the qualitative requirements relating to the system

governance, the assessment

the risks which the undertakings concerned face or may face and the assessment

the ability

those undertakings to assess those risks taking into account the environment in which the undertakings are operating. Supervisory review process. Added by: XXXIII. 2015.31. INSURANCE BUSINESS

(2)The competent authority shall in particular review and evaluate compliance with the following: (a) the system

governance, including the own-risk and solvency assessment, as set out in article 18I; (

  1. b)the technical provisions as provided for in article 18E; (
  2. c)the capital requirements as provided for in articles 15 and 17; (
  3. d)the investment rules as set out in Insurance Rules issued in terms

this Act; (e) the quality and quantity

own funds as determined by Insurance Rules issued pursuant to article 14; and (f) where the authorised insurance or reinsurance undertaking uses a full or partial internal model, ongoing compliance with the requirements for full and partial internal models set out in Insurance Rules issued pursuant to article 15.

(3)The competent authority shall assess the adequacy

the methods and practices

the authorised insurance or reinsurance undertakings designed to identify possible events or future changes in economic conditions that could have adverse effects on the overall financial standing

the undertaking concerned.

(4)The competent authority shall assess the ability

the authorised undertakings to withstand those possible events or future changes in economic conditions.

(5)Where the competent authority identifies any weakness or deficiency as a consequence

the supervisory review process, it shall request the insurance or reinsurance undertaking concerned to remedy such weakness or deficiency within such period and in such manner as it may deem necessary or appropriate in the circumstances.

(6)The reviews, evaluations and assessments referred to subarticles
(1)to
(4), shall be conducted regularly and the competent authority shall establish the minimum frequency and the scope

those reviews, evaluations and assessments having regard to the nature, scale and complexity

the activities

the insurance or reinsurance undertaking concerned.

(7)In the case

events or future changes in economic conditions that could have unfavourable effects on the overall financial standing

authorised insurance or reinsurance undertakings, in addition to the calculation

the Solvency Capital Requirement, the competent authority may require undertakings to carry out such tests as may be determined to assess the ability

the undertakings concerned to withstand such events or future changes in economic conditions that could have unfavourable effects on their overall financial stability. Power to set a capital add-on. Added by: XXXIII. 2015.31. 31C.

(1)Following the supervisory review process carried out in terms

article 31B, the competent authority may, in exceptional circumstances, set a capital add-on for an authorised insurance or INSURANCE BUSINESS reinsurance undertaking stating the reasons for its decision. Such power shall be exercised in the following cases: (a) where it concludes that the risk profile

the authorised insurance or reinsurance undertaking deviates significantly from the assumptions underlying the Solvency Capital Requirement, as calculated using the standard formula in accordance with article 15; and (i) the requirement to use an internal model under article 15

(3)is inappropriate or has been ineffective; or (ii) while a partial or full internal model is being developed in accordance with article 15
(3); (b) where it concludes that the risk profile

the authorised insurance or reinsurance undertaking deviates significantly from the assumptions underlying the Solvency Capital Requirement, as calculated using an internal model or partial internal model because certain quantifiable risks are captured insufficiently and the adaptation

the model to better reflect the given risk profile has failed within an appropriate timeframe; (c) where it concludes that the system

governance

an authorised insurance or reinsurance undertaking deviates significantly from the standards laid down in article 18I and Insurance Rules issued thereunder, that those deviations prevent the undertaking from being able to properly identify, measure, monitor, manage and report the risks that it is or could be exposed to and the application

other measures is in itself unlikely to improve the deficiencies sufficiently within an appropriate timeframe; (d) the authorised insurance or reinsurance undertaking applies the matching adjustment or the volatility adjustment referred to in Articles 77b and 77d

the Solvency II Directive, respectively, or the transitional measures referred to in Articles 308c and 308d

the said Directive and the competent authority concludes that the risk profile

that undertaking deviates significantly from the assumptions underlying those adjustments and transitional measures; or (e) in any

those circumstances as may be additionally specified by the Solvency II Directive.

(2)In the circumstances set out: (
  1. a)in paragraphs (
  2. a)and (b)

sub-article

(1), the capital add-on shall be calculated in such a way as to ensure that the undertaking complies with Article 101
(3)

the Solvency II Directive; (b) in paragraph (c)

sub-article

(1), the capital add-on shall be proportionate to the material risk arising from the deficiencies which gave rise to the decision

the INSURANCE BUSINESS competent authority to set the add-on; and (c) in paragraph (d)

sub-article

(1), the capital add-on shall be proportionate to the material risk arising from the deviation referred to in that paragraph.
(3)In the cases set out in paragraphs (b) and (c)

sub-article

(1), the authorised insurance or reinsurance undertaking shall remedy the deficiencies that led to the imposition

the capital add-on without delay.

(4)The competent authority shall review the capital add-on, at least once a year and it shall approve the removal

such capital add-on when the undertaking has remedied the deficiencies which led to its imposition.

(5)The Solvency Capital Requirement including the capital add-on imposed shall replace the inadequate Solvency Capital Requirement: Provided that, the Solvency Capital Requirement shall not include the capital add-on imposed in accordance with sub-article
(1)(c), for the purposes

the calculation

the risk margin referred to in Article 77

(5)

the Solvency II Directive. Information to be provided for supervisory purposes. Amended by: XII. 2006.

  1. Substituted by: XXXIII. 2015.
  2. Amended by: XXVI.2018.
  3. An authorised insurance and reinsurance undertaking shall submit to the competent authority the information which is necessary for the purposes

supervision, taking into account the o b j e c t i v e s o f su p e r v i si o n , as may be specified by means

regulations, Insurance Rules or Conduct

Business Rules which shall also specify the period within which this information is to be submitted. Added by: XXXIII. 2015.

  1. PART VIIA Group supervision. Added by: XXXIII. 2015.
  2. GROUP SUPERVISION 32A. The competent authority shall provide for supervision, at the level

the group,

insurance and reinsurance undertakings which are part

a group in accordance with regulations or Insurance Rules issued for the purposes

this Part. Group supervisor. Added by: XXXIII. 2015.33. 32B.

(1)The group supervisor

insurance and reinsurance undertakings which are part

a group, shall be responsible for coordination and the exercise

group supervision.

(2)For the purposes

this Part, "group supervisor" means the supervisory authority responsible for group supervision, determined in accordance with Article 247

the Solvency II Directive.

(3)Where the competent authority is the group supervisor, it shall, with regard to group supervision, carry out the following functions: (a) coordination

the gathering and dissemination

relevant or essential information for going concern and emergency situations, including the dissemination

information which is

importance for the carrying INSURANCE BUSINESS out

the supervisory tasks

authorities responsible for the supervision

an individual insurance or reinsurance undertaking in the group; (b) supervisory review and assessment

the financial situation

the group; (c) assessment

compliance

the group with the rules on solvency and

risk concentration and intra-group transactions as set out in Articles 218 to 245

the Solvency II Directive; (d) assessment

the system

governance

the group, as set out in Article 246

the Solvency II Directive, and

whether the board

directors

the participating undertaking fulfils the requirements

fitness and properness set out in Articles 42 and 257

the Solvency II Directive; (e) planning and coordination, through regular meetings held at least annually or through other appropriate means,

supervisory activities in going-concern as well as in emergency situations, in cooperation with the authorities responsible for the supervision

an individual insurance or reinsurance undertaking in a group, and taking into account the nature, scale and complexity

the risks inherent in the business

all undertakings that are part

the group; (f) other tasks, measures and decisions assigned to the competent authority, as group supervisor, by the Solvency II Directive or deriving from the application

that Directive, in particular leading the process for validation

any internal model at group level as set out in Articles 231 and 233

Solvency II Directive and leading the process for permitting the application

the regime established in Articles 237 to 240

the said Directive.

(4)In order to facilitate the exercise

group supervision tasks, set out in sub-article

(3), a college

supervisors shall be established. It shall be chaired by the competent authority where it i s t h e g r o u p s u p e r v i s o r. T h e m e m b e r s h i p , f u n c t i o n i n g a n d consultation processes

the college

supervisors shall be determined by regulations or Insurance Rules. 32C.

(1)Where the competent authority is the group supervisor, it shall cooperate closely with the other authorities responsible for the supervision

individual insurance or reinsurance undertakings in a group, in particular, in cases where an insurance or reinsurance undertaking within the group encounters financial difficulties.

(2)Where the competent authority is one

the authorities responsible for the supervision

an individual insurance or reinsurance undertaking in a group, it shall cooperate closely with other responsible authorities in the group and the group supervisor, i n p a r t i c u l a r, i n c a s e s w h e r e a n i n s u r a n c e o r r e i n s u r a n c e Co-operation and exchange

information with respect to group supervision. INSURANCE BUSINESS undertaking encounters financial difficulties.

(3)Where the competent authority is the group supervisor or is one

the authorities responsible for the supervision

an individual insurance or reinsurance undertaking in a group, it shall (a) provide other authorities responsible for the supervision

an individual insurance or reinsurance undertaking in a group with such information so as to allow and facilitate the exercise

the supervisory tasks concerned under the Solvency II Directive; (

  1. b)communicate all relevant information to such authorities without delay, as soon as it becomes available or exchange information on request; and (
  2. c)call immediately for a meeting

all the authorities involved in the supervision

the group, at least where (i) it becomes aware

a significant breach

the Solvency Capital Requirement or a breach

the Minimum Capital Requirement

an individual insurance or reinsurance undertaking; (ii) it becomes aware

a significant breach

the Solvency Capital Requirement at group level calculated on the basis

consolidated data or the aggregated group Solvency Capital Requirement, in accordance with whichever calculation method is used, in Title III, Chapter II, Section I, Subsection 4

the Solvency II Directive; or (iii) other exceptional circum-stances are occurring or have occurred.

(4)Where one

the authorities responsible for the supervision

an individual insurance or reinsurance undertaking in a group has not communicated relevant information, or a request for cooperation, in particular to exchange relevant information, has been rejected or has not been acted upon within two weeks, the competent authority may refer the matter to EIOPA.

(5)Where the group supervisor fails to carry out the tasks referred to in paragraph
(1)

Article 248

the Solvency II Directive, or where the members

the college

supervisors do not cooperate to the extent required by that sub-article, the competent authority may refer the matter to EIOPA and request its assistance in accordance with Article 19

Regulation (EU) No 1094/2010.

(6)Where the competent authority is the group supervisor, it shall provide the authorities responsible for the supervision

an individual insurance or reinsurance undertaking in a group and EIOPA with information regarding the group in accordance with Article 19, Article 51

(1)and Article 254
(2)

the Solvency II Directive, in particular regarding the legal structure and the governance and organisational structure

the group. INSURANCE BUSINESS

(7)Without prejudice to Article 248

the Solvency II Directive, the competent authority shall, where a decision is

importance for the supervisory tasks

the other authorities responsible for the supervision

an individual insurance or reinsurance undertaking in a group, prior to taking any decision, consult the said authorities in the college

supervisors with regard to the following: (a) changes in the shareholding structure, organisational or management structure

an authorised insurance and reinsurance undertaking which is part

a group and which requires the approval or authorisation

the competent authority; (b) the decision on the extension

the recovery period in accordance with Article 138

(3)and
(4)

the Solvency II Directive; (c) major sanctions or exceptional measures taken by the competent authority, including the imposition

a capital add-on to the Solvency Capital Requirement under article 31C and the imposition

any limit

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AI explanation based on the official legal text. Indicative, not a substitute for legal advice.