Insurance Services

The insurance industry in Malta is regulated by the Insurance Business Act which provides for the authorisation and supervision of insurance companies by the regulator. The MFSA is obliged to ensure that authorised entities adhere to the provisions of the acts and any regulations issued there under together with applicable insurance rules. An application for a general insurance or reinsurance licence will be processed within a statutory six month period.

Captive Insurance Companies

In the current market conditions, certain industries may not find adequate insurance coverage for their operation at an acceptable price. In such situations, operators may be better off to cover their risks through a captive insurance company – thus providing the additional benefit of having an insurer that fully understands the risk in question while being able to charge an acceptable premium.

Maltese legislation provides a specific regime that caters for the captive insurance industry. Captive insurance companies are known as Affiliated Insurance Companies at law and may insure risks for group or associated companies, individuals or other entities with a controlling interest in the affiliated insurance company and members of a trade, industry or profession.

Malta also provides for the possibility to establish captive reinsurers – which although are subject to the Reinsurance Directive may benefit from a reduced own funds requirement than general reinsurers.

Protected Cell Companies

An independent captive insurance company may not suit the needs of smaller operators and therefore may be better suited to resort to a Protected Cell Company (PCC) for its insurance requirements – Maltese law recognises the differing requirements of business operators and is the only EU Member State that has catered for such an entity.

A protected cell company’s assets is segregated into different cells whereby each cell may have different promoters and cover insurance risks (as a captive) of different business operations. The assets of each cell is completely separate from that of the other cells to the extent that creditors of one cell would not be able to seek payment of their debt over the assets of another cell. The PCC provides the advantages of a captive insurance company without having the same costs in terms of funds and management that a standalone captive would have.

Insurance Managers

Captive insurance companies may not necessarily require a dedicated insurance manager to run the companies insurance business. Such captive insurance companies would therefore require the services of an insurance manager. There are several internationally renowned insurance managers licensed and operating in Malta.

Taxation of Insurance Operations

Insurance companies and insurance managers are subject to the standard corporate tax and refund regime applicable in Malta providing for an advantageous tax leakage in Malta. Furthermore Malta does not apply withholding taxes on the repatriation of dividends to foreign shareholders. Being an EU Member State since 2004, Maltese companies may take full advantage of the single market and relevant fiscal benefits provided in EU Directives. Malta also has in excess of fifty double tax treaties which may be resorted.