Regulations, 2004

Suppliment tal-Gazzetta tal-Gvern ta’ Malta, Nru. 17,542, 20 ta’ Frar, 2004

L.N. 89 of 2004

INSURANCE BUSINESS ACT

(CAP. 403)

European Passport Rights for Insurance Undertakings

Regulations, 2004

IN exercise of the powers conferred by article 64 of the Insurance

Business Act, the Minister of Finance and Economic Affairs, after

consultation with the Malta Financial Services Authority, as the

competent authority appointed for the purposes of the Act, has made

the following regulations:-

PRELIMINARY

(1) The title of these regulations is the European Passport Citation and

commencement.

Rights for Insurance Undertakings Regulations, 2004.

(2) These regulations shall come into force on the 1 st May, 2004.

In these regulations, unless the context otherwise requires - Interpretation.

“the Act” means the Insurance Business Act;

“Commission” means the Commission of the European

Communities;

“competent authority” means the Malta Financial Services

Authority appointed under article 3 of the Act;

“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

17 th March, 1993 and as amended from time to time;

“European insurance undertaking” means an undertaking

having its head office in a Member State or an EEA State, other

than Malta, pursuing the activity of direct insurance within the

meaning of article 2 of Directive 2002/83/EC or article 1 of

Directive 73/239/EEC which has received authorisation under

article 4 or article 6 respectively;

“European right” means the entitlement of an insurance

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 office-

(a) in accordance with the Treaty as applied in a

Member State or an EEA State; and

(b) subject to the requirements of the Single Market

Directive and subject to any rules or regulations made under

the Act, or insurance directives issued by the competent

authority pursuant to the Act, implementing such

requirements;

“foreign authority” means the body or bodies designated by

a Member State or EEA State

(a) to act as a supervisory authority in relation to the

European insurance undertaking concerned in that Member

State or EEA State within the meaning of the Directive; or

(b) to carry out the duties provided for in the Single

Market Directive in relation to a Maltese insurance

undertaking exercising or proposing to exercise a European

right.

“home Member State” means the Member State or EEA State

in which the head office of the insurance undertaking covering the

commitment or risk is situated;

“host Member State” means the Member State or EEA State

where a Maltese insurance undertaking whose head office is in

Malta, exercises or proposes to exercise European rights;

“insurance directive” means a directive in respect of the

business of insurance issued by the competent authority in terms

of article 4(3) of the Act;

“Maltese insurance undertaking” means a company authorised

in terms of the Act, whose head office is in Malta and which is

entitled to carry on business of insurance in a Member State or

EEA State, other than Malta in exercise of a European right;

“ Maltese rules” means rules-

(a) made in accordance with the Single Market

Directive; and

(b) which are the responsibility of the competent

authority (as to implementation, supervision and compliance)

in accordance with the Single Market Directive and subject

to the provisions of the Act and any rules, regulations and

insurance directives made thereunder;

“Member State” means a Member State of the European

Communities;

“Ordinance” means the Motor Vehicle Insurance (Third- Cap. 104.

Party Risks) Ordinance, or any enactment replacing that law,

and any regulations made thereunder;

“risk situated in a Member State or EEA State” means

(a) the Member State or EEA State in which the

property is situated, 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;

(b) the Member State or EEA State of registration

where the insurance relates to vehicles of any type;

(c) the Member State or EEA State where the

policyholder took out the policy in the case of policies of a

duration of four months or less, covering travel or holiday

risks, whatever the class concerned; or

(d) the Member State or EEA where the policyholder

has his habitual residence or, where the policyholder is a legal

person, the Member State or EEA State where the

establishment of the legal person, to which the contract relates,

is situated;

“ ‘Single Market Directive’ or ‘Directives’”, means the

following Codified Life Assurance Directive and the First, Second

and Third Non-Life Insurance Directives

(a) “Codified Life Assurance Directive” means

Directive 2002/83/EC of 5 November 2002 of the European

Parliament and of the Council concerning life assurance;

(b) “First Non-Life Insurance Directive” means the

Council Directive 73/239/EEC of 24 July 1973 on the co-

ordination of laws, regulations and administrative provisions

relating to the taking up and pursuit of the business of direct

insurance other than life assurance;

(c) “Second Non-Life Insurance Directive” means the

Council Directive 88/357/EEC of 22 June 1988 on the co-

ordination of laws, regulations and administrative provisions

relating to direct insurance other than life assurance and laying

down provisions to facilitate the effective exercise of freedom

to provide services and amending Directive 73/239/EEC;

(d) “Third Non-Life Insurance Directive” means the

Council Directive 92/49/EEC of 18 June 1992 on the co-

ordination of laws, regulations and administrative provisions

relating to direct insurance other than life assurance and

amending Directives 73/239EEC and 88/357/EEC;

“supervisory authority” means the foreign authority in a

Member State or EEA State;

“Treaty” means Treaty of Rome signed in 1957, establishing

the European Economic Community and as subsequently amended;

“Tribunal” means the Financial Services Tribunal referred to

in article 57 of the Act,

and the words and expressions which are also used in the Act

shall, in these regulations, have the same meanings as in the Act.

PART I – EXERCISE OF PASSPORT RIGHTS BY

EUROPEAN INSURANCE UNDERTAKINGS

(1) A European insurance undertaking which is seeking to

establish a branch in Malta in exercise of a European right shall satisfy

the establishment conditions specified in sub-regulation (2) of this

regulation and shall be exempt from the provisions of article 6 of the

(2) The establishment conditions for the purposes of this

regulation are that -

(a) the European insurance undertaking has given the

supervisory authority in its home Member State a notice containing

the requisite details in terms of article 32 of Directive 92/49/EEC

and article 39 of Directive 2002/83/EC ;

(b) the competent authority has received from the

supervisory authority of such European insurance undertaking a

consent notice in accordance with paragraph (c) stating that it has

given its consent to the insurance undertaking to establish a branch

in Malta; and

(c)

the consent notice shall include:-

(i) a scheme of operations setting out, inter alia, the

class or classes of long term business or class or classes or

part classes of general business the branch proposes to carry

on and the structural organisation of the branch;

(ii) the address in Malta from where documents may

be obtained and to which they may be delivered, and such

address shall be the one to which all communications to the

general representative are to be sent;

(iii) the name of the general representative who must

possess sufficient powers to bind the insurance undertaking

in relation to third parties and to represent it in relations with

the competent authority and courts in Malta;

(iv) a certificate issued by the foreign authority where

the head office is situated, attesting that such European

insurance undertaking has, for its activities as a whole, the

minimum solvency margin calculated in accordance with the

applicable Directives;

(v) confirmation that such European insurance

undertaking is authorised to carry on the business of insurance

which it proposes to carry on in Malta;

(vi) information stated in the notice given by such

European insurance undertaking in terms of paragraph (a) of

sub-regulation (2) of this regulation; and

(vii) details of any insurance guarantee scheme, if

applicable, which is intended to protect the branch’s

policyholders.

(3) The supervisory authority of the European insurance

undertaking shall inform the competent authority of any change in the

details of an insurance guarantee scheme referred to in sub-regulation

(2) of this regulation.

(4) A branch of a European insurance undertaking shall not

commence business unless:-

(a) it has been informed by the competent authority of any

applicable provisions and that it may establish the branch; or

(b) the competent authority has, within two months of

receiving the information referred to in sub-regulation (2),

informed the foreign authority, if appropriate, of the conditions

under which, in the interest of the general good, that business must

be carried on in Malta.

(5) In the event of a change in any of the particulars

communicated in accordance with indents (i), (ii), (iii) of paragraph (c)

of sub-regulation (2) of this regulation, the European insurance

undertaking shall give written notice of the change to the supervisory

authority and to the competent authority at least one month before

implementing the change.

(6) For the purpose of this regulation-

“applicable provisions” means the Maltese rules in

accordance with which the European insurance undertaking is

required to comply when carrying on the class or classes of long

term business or class or classes or part classes of general business,

identified in the consent notice, through a branch in Malta.

(1) A European insurance undertaking which is seeking to

provide services in Malta in exercise of a European right shall satisfy

the service conditions specified in sub-regulation (2) of this regulation

and shall be exempt from the provisions of article 6 of the Act.

(2) The service conditions for the purposes of this regulation

are that -

(a) the European insurance undertaking has given its

supervisory authority a notice of intention to provide services in

Malta with the requisite details in terms of article 35 of Directive

92/49 and article 40 of Directive 2002/83;

(b) the competent authority has received a notice of such

intention from the supervisory authority of the European insurance

undertaking;

(c) without prejudice to regulation 6 of these regulations,

the insurance undertaking has obtained from the supervisory

authority an authorisation for the risks it proposes to cover or for

the commitments it proposes to undertake;

(d) the foreign authority has communicated the following

documents and information to the competent authority-

(i) a certificate attesting that such insurance

undertaking possesses, for its activities as a whole, the

minimum solvency margin calculated in accordance with the

applicable Directives;

(ii) the class or classes of long term business or class

or classes or part classes of general business which the

insurance undertaking is authorised to carry on;

(iii) the nature of the risks which the undertaking

proposes to cover or the commitments which it proposes to

undertake in Malta; and

(e) the supervisory authority has informed the European

insurance undertaking that the notice from the supervisory authority

has been sent to the competent authority.

(3) When the competent authority has received such a notice

from the foreign authority and has been informed of the intention of the

European insurance undertaking to provide services in Malta, it shall,

where appropriate-

(a) prepare for the supervision of the European insurance

undertaking; and

(b) notify the European insurance undertaking of the

applicable provisions, if any.

(4) In the event of a change in the content of the information

given in indents (ii) and (iii) of paragraph (d) of sub-regulation (2) of

this regulation, the European insurance undertaking shall give written

notice of that change to the competent authority and its supervisory

authority before implementing such change.

(5) For the purposes of this regulation-

“applicable provisions” means the Maltese rules in

accordance with which the European insurance undertaking is

required to comply when providing services in Malta in the class

or classes of long term business or class or classes or part classes

of general business, identified in the notice provided by the

supervisory authority of the European insurance undertaking.

Any European insurance undertaking carrying on business of European

undertaking

insurance in Malta in exercise of a European right, covering risks relating covering Risks

to class 10 of Part 1 of the Third Schedule to the Act, not including relating to Class 10.

carrier’s liability, shall be required to provide the competent authority

with the information contained in an insurance directive for the purposes

of these regulations.

(1) The competent authority may, for statistical purposes,

require a European insurance undertaking which has established a branch

in Malta in terms of these regulations, to report periodically on its

activities in Malta.

(2) In discharging its responsibilities under these regulations,

the competent authority may require such European insurance

undertaking to provide the same information as Maltese insurance

undertakings would be required to provide for that purpose.

(3) The competent authority may require such European

insurance undertaking carrying on business of insurance in Malta, to

provide the information necessary for the monitoring of its compliance

with the standards set by the competent authority to the extent permitted

by the Single Market Directive.

A European insurance undertaking shall not be prohibited from

advertising its services through any available means of communication

in Malta provided that it complies with insurance directive 14 of 1999

made pursuant to article 48 of the Act, and any other directive adopted

by the competent authority in the interest of the general good.

(1) Where a European insurance undertaking carries on

business of insurance in Malta through a branch in exercise of a European

right, its supervisory authority may, after having first informed the

competent authority, carry out itself or through an intermediary it

appoints for that purpose, on-site verification of the information

necessary to ensure the financial supervision of the undertaking. The

competent authority may participate in that verification.

(2) The foreign authority may also request the competent

authority to have such on-site verification carried out on its behalf.

(3) This regulation shall not affect the right of the competent

authority, in discharging its responsibilities under the Directives, to carry

out on-site verifications of branches established in Malta.

(4) Where the competent authority has reason to consider

that the activities of a European insurance undertaking, carrying on

business of insurance in exercise of a European right, might affect its

financial soundness, it shall inform the foreign authority.

PART II – EXERCISE OF PASSPORT RIGHTS BY

MALTESE INSURANCE UNDERTAKINGS

(1) A Maltese insurance undertaking may exercise a Exercise of passport

rights by Maltese

European right to establish a branch if it satisfies the requirements set insurance

undertakings –

out in the following provisions of this regulation.

establishment.

(2) Pursuant to subarticle (3) of article 10 of the Act, a

Maltese insurance undertaking intending to establish a branch in exercise

of a European right shall give the competent authority a notice of

intention which shall contain-

(a) the Member State or EEA State within the territory of

which the insurance undertaking proposes to establish a branch;

(b) a scheme of operations setting out, inter alia, the class

or classes of long term business or class or classes or part classes

of general business and the structural organisation of the branch;

(c) the address of the proposed branch from where

documents may be obtained and to which they may be delivered,

and such address shall be the one to which all communications to

the general representative are to be sent;

(d) the name of the branch’s general representative who must

possess sufficient powers to bind the insurance undertaking in

relation to third parties and to represent it in relations with the

authorities and courts of the host member state;

(e) such other information as may be specified by means of

an insurance directive.

(3) Without prejudice to sub-regulations (6),(7) and (8) of

this regulation, the competent authority shall give a consent notice within

the meaning of sub-regulation (4) of this regulation to the foreign

authority within three months of receiving a complete notice of intention.

(4) The consent notice shall :-

(a) be given in accordance with the Single Market Directive;

(b) attest that the Maltese insurance undertaking has, for its

activities as a whole, the minimum solvency margin calculated in

accordance with the applicable Directives;

(c) confirm that the Maltese insurance undertaking is

authorised to carry on the business of insurance which the branch

proposes to carry on;

(d) contain the information stated in the notice of intention

of the Maltese insurance undertaking;

(e) contain details of any insurance guarantee scheme which

is intended to protect the branch’s policyholders; and

(f) include such other information as may be established by

means of an insurance directive.

(5) The foreign authority shall be informed by the

competent authority of any change in the details of the

insurance guarantee scheme referred to in sub-regulation (4)

of this regulation.

(6) (a) Unless the competent authority has reason to

doubt the adequacy of the administrative structure, the

financial situation of the Maltese insurance undertaking or

the good repute and professional qualification or experience

of the directors or managers or the general representative,

taking into account the business planned, it shall, within three

months of receiving all the information referred in sub-

regulation (2) of this regulation, communicate that information

to the foreign authority of the branch and shall inform the

undertaking concerned accordingly

Provided that, in the event of any change in any of the

particulars referred to in this sub-regulation, the competent

authority shall inform the foreign authority accordingly.

(b) The competent authority shall also attest that the Maltese

insurance undertaking has the minimum solvency margin calculated

in accordance with articles 14 and 16 of the Act.

(c) Where the competent authority refuses to communicate

the information referred to in sub-regulation (2) of this regulation

to the foreign authority of the branch, it shall give the reasons for

its refusal to the undertaking concerned within three months of

receiving all the information in question. The refusal or failure to

act in the period stipulated shall be subject to a right of appeal to

the Tribunal and the provisions of article 58 of the Act shall apply

mutatis mutandis.

(7) Before the branch of a Maltese insurance undertaking

exercising a European right commences business, the foreign authority

of the branch shall, within two months of receiving the information

referred to in sub-regulation (6) of this regulation, inform the competent

authority, if appropriate, of the applicable provisions under which that

business must be carried on in the host Member State.

(8) On receiving a communication from the foreign

authority of the branch, or if no communication is received from them,

on the expiry of the period provided for in sub-regulation (7) of this

regulation, the Maltese insurance undertaking may establish the branch

and commence business.

(9) In the event of a change in any of the particulars

communicated in accordance with paragraphs (b),(c) and (d) of sub-

regulation (2) of this regulation, the Maltese insurance undertaking shall

give written notice of the change to the competent authority and to the

foreign authority of the branch at least one month before implementing

the change.

(10) The prudential supervision of a Maltese insurance

undertaking shall be the responsibility of the competent authority

whether or not the insurance undertaking establishes a branch or provides

services in another Member State or EEA State, without prejudice to

those provisions of the Single Market Directive which give responsibility

to the foreign authority.

(11)

For the purposes of this regulation-

“applicable provisions” means the host state rules with which

the Maltese insurance undertaking is required to comply when

conducting business through the proposed branch in the host

Member State concerned;

“host state rules” means rules-

(a)

made in accordance with the Directives; and

(b) which are the responsibility of the foreign authority

concerned (both as to the implementation and as to supervision

of compliance) in accordance with the Directives;

(12) The competent authority shall inform the Commission

of the number of cases and the circumstances in which there have been

refusals in terms of sub-regulation (6) of this regulation.

(1) A Maltese insurance undertaking which intends to

provide services for the first time in one or more Member States or

EEA States in exercise of a European right shall first provide a notice

of intention to the competent authority indicating

(a) the nature of the commitments it proposes to cover, or the

risks which it proposes to undertake;

(b) the Member State or EEA State in which it intends to operate;

(c) such other information as may be specified in an insurance

directive

(2) The competent authority shall, within one month of

receiving the notice of intention

(a) give a consent notice to the foreign authority containing

(i) a certificate attesting that the insurance undertaking

has the minimum solvency margin calculated in accordance

with articles 14 and 16 of the Act;

(ii) the class or classes of long term business or class or

classes or part classes of general business which the insurance

undertaking has been authorised to carry on;

(iii) the nature of the risks which the insurance

undertaking proposes to undertake or commitments it proposes

to cover in the host Member State of the provision; and

(iv) details of any insurance guarantee scheme, if

applicable, intended to protect policyholders; or

(b) give written notice to the Maltese insurance undertaking of-

(i)

its refusal to give a consent notice; and

(ii) its reasons for that refusal

Provided that, where the Maltese insurance undertaking

is given notice under paragraph (b) of sub-regulation (2) of

this regulation, such notice is subject to a right of appeal to

the Tribunal and the provisions of article 58 of the Act shall

apply mutatis mutandis.

(3) When the competent authority sends the information

contained under paragraph (a) of sub-regulation (2) of this regulation,

it shall give written notice to the Maltese insurance undertaking

concerned. The Maltese insurance undertaking may, after having

received such written notice, start to provide the services in question in

the host Member State

Provided that, where appropriate, the foreign authority shall,

on receipt of the information from the competent authority, indicate to

the Maltese insurance undertaking the conditions with which, in the

interest of the general good, the provider of the services shall comply in

the host Member State.

(4) In the event of a change in any of the particulars provided

by the Maltese insurance undertaking in the notice of intention, the

Maltese insurance undertaking shall give written notice of that change

to the competent authority and the foreign authority before implementing

such change.

PART III – EUROPEAN INSURANCE UNDERTAKINGS

NOT COMPLYING WITH LEGAL PROVISIONS

(1) Where the competent authority ascertahfis that a Contravention by

European insurance

European insurance undertaking which has established a branch in Malta undertakings.

or provides services in Malta

(a) has contravened or is likely to contravene the Maltese

rules or any provision of the Act or any rules, regulations or

insurance directives made thereunder;

(b) in purported compliance with any such provisions, has

furnished it with false, inaccurate or misleading information; or

(c) has failed to comply with any condition, limitation,

requirement, directive or order made or given under any of the

provisions of the Act, or of any rules or regulations made thereunder

or any insurance directives,

it shall, in writing, require the insurance undertaking

concerned to remedy and rectify its position.

(2) If the European insurance undertaking concerned fails

to take necessary steps to remedy and rectify its position, the competent

authority shall inform the foreign authority of such failure. The foreign

authority shall, at the earliest opportunity, take all appropriate measures

to ensure that the European insurance undertaking concerned rectifies

its position. The nature of those measures shall be communicated to the

competent authority.

(3) If, despite the actions taken by the foreign authority, or

because those measures prove inadequate or are not available in Malta,

the European insurance undertaking persists in violating the legal or

regulatory provisions referred to in sub-regulation (1) of this regulation

in force in Malta, the competent authority may, after informing the

foreign authority, take appropriate measures to prevent or penalise further

irregularities, including, in so far as is strictly necessary, to prevent that

European insurance undertaking from continuing to conclude new

insurance contracts in Malta.

(4) Any measure adopted pursuant to this regulation shall

be communicated to the European insurance undertaking concerned in

writing, together with reasons justifying such measures and shall be

subject to a right of appeal to the Tribunal and the provisions of article

58 of the Act shall apply mutatis mutandis.

(5) Notwithstanding the provisions of this regulation, the

competent authority may, in exceptional circumstances, take any

precautionary measures necessary to protect the interests of insureds,

policyholders, creditors and other interested persons with whom

insurance contracts are concluded. The competent authority shall inform

the Commissioner and the foreign authority concerned of such measures

at the earliest opportunity.

(6) If a European insurance undertaking which is in breach

of any provisions of these regulations has an establishment or possesses

property of any description in Malta, the competent authority may, in

accordance with national law, impose an administrative penalty pursuant

to article 67 of the Act.

(7) Where the competent authority is informed by the

foreign authority of another Member State or EEA State of the

withdrawal of the authorisation of a European insurance undertaking

carrying on business of insurance in Malta in the exercise of a European

right, it shall take appropriate measures to prevent the undertaking

concerned from concluding new insurance contracts in Malta under

either the right of establishment or the freedom to provide services.

The competent authority shall, in conjunction with those authorities,

take all necessary measures to safeguard the interests of insured persons,

policyholders, creditors and other interested persons and shall restrict,

in particular, the free disposal of assets of the undertaking in accordance

with subarticle (2) of article 15 of the Act and may make or issue public

statements or notices in relation to these measures.

(8) A prohibition under this regulation may be -

(a)

absolute; or

(b) limited, that is, imposed for a specified event or until

specified conditions are complied with,

and any period, event or conditions specified in the case of a

limited prohibition may be varied by the competent authority and

any such notice shall take effect on such date as is specified in the

notice.

PART IV –APPLICABILITY PROVISIONS

(1) A company whose head office is in Malta and which, Applicability

provisions.

on the date of the coming into force of these regulations was authorised

in terms of article 7 of the Act to carry on business of insurance in the

classes of business of insurance specified in the Second and Third

Schedule to the Act or such parts of those classes, shall be deemed to be

a Maltese insurance undertaking for the purposes of these regulations

Provided that, such company conforms with all insurance

directives, conditions, directives and guidelines issued by the competent

authority for such purpose.

(2) Every authorisation issued to a company whose head

office is in Malta after the coming into force of these regulations, shall

indicate whether it qualifies for a European right in terms of these

regulations.

PART V- INTERPRETATION

(1) The purpose of these regulations is to implement the Interpretation.

provisions of Council Directive 73/239/EEC, Council Directive 88/357/

EEC, Council Directive 92/49/EEC and Directive 2002/83/EC of the

European Parliament and of the Council, as amended and shall be

interpreted and applied accordingly.

(2) In the event that any of these regulations conflict with

the provisions of the Directives, the latter shall prevail.