John Tortell is the Director of USA Risk Group (Malta) Ltd., and was the first Chairman of the Malta Insurance Managers Association.
Insurance management in Malta Malta is set to become one of Europe’s leading captive insurance domiciles, says John Tortell.
Malta has developed innovative alternative risk solutions that enable corporations to maintain affordable and flexible insurance coverage, improve cash flow, and control expenses.
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hen Malta joined the European Union in May 2004, it had already taken steps to implement a regulatory framework that operated to EU standards and could accommodate pure captive insurance companies. It now looks set to become one of Europe’s leading captive insurance domiciles. With a captive insurance vehicle, companies stabilise coverage for specific exposures while participating in the underwriting profit and investment income. In addition, captives control the processing of claims, have flexibility with policy provisions, and gain special cash flow advantages. With expert implementation and management, a captive or risk retention group gives companies an excellent tool to help manage risk and control costs. Pure captives are classified as Affiliated Insurance Companies and are granted some important exemptions from some of the provisions of the Insurance Business Act which regulates all Maltese insurers. For instance, they are granted exemption from contributing to the Protection and Compensation Fund and from paying duty on contracts of insurance relating to risks outside Malta. Malta can offer both pure captives and captives writing third party business a wealth of benefits. The first is the ability to write policies directly into the EU and European Economic Area – full EU membership enables Maltese captives to dispense with the
need for fronting companies into the EU/European Economic Area.
secretarial services; cash management services; and regulatory compliance.
Another benefit is an effective and responsive regulation – this is to EU standards and is both flexible and responsive, for which the most successful established captive domiciles are favoured. Protected Cell Companies legislation enables a PCC to be formed in Malta whereby each cell’s assets and liabilities are legally separated. Also, an insurance company insuring risks outside Malta can receive tax refunds which reduce the effective tax rate in addition to Malta having double taxation treaties with 60 countries. There is also migration from other jurisdictions – the Continuation of Insurance Companies Regulations 2003 enables captives to be easily relocated from other jurisdictions which have similar legislation.
The training process has also developed locally. Students can study insurance specifically both at the University of Malta where specialisation is obtained in financial services and the Malta Insurance Training Centre where insurance-specific courses are offered in collaboration with the Chartered Insurance Institute of London. These all help in the process of attracting more youngsters into the financial services field where they are likely to obtain good placements after graduating.
Moreover, Malta is an established financial centre – insurance, legal and accounting expertise is all available within Malta’s highly trained professional workforce.
Malta has developed innovative alternative risk solutions that enable corporations to maintain affordable and flexible insurance coverage, improve cash flow, and control expenses. In these days of cost cutting measures, it is one of the most important features to any development of new international markets. These are done in the form of non-traditional solutions to create a custom designed product.
Malta will be worth considering as the location for a captive where the ability to issue policies directly into the EU/ EEA may provide significant savings on fronting and collateral costs. Among the services that local managers provide will be: preparation of feasibility studies; incorporation and licensing of captives; underwriting captive risks; reinsurance placement; accounting, administration and management of captive; corporate
As a jurisdiction we have now earned the reputation that ensures clients will always be dealing with teams of professionals that provide the full range of services for consultancy, project management and ongoing management services for captive insurance companies. This includes the legal, auditing and regulatory field with all sectors working hand in hand to create an effective insurance domicile.
Money / Issue 03 - 41