Insurance Business (Penalties for Offences and Infringements)

L.N. 142 of 2007

INSURANCE BUSINESS ACT

(CAP.403)

Insurance Business (Penalties for Offences and Infringements)

(Amendment) Regulations, 2007

IN exercise of the powers conferred by article 67 of the Insurance

Business Act, the Prime Minister and Minister of Finance, after

consultation with the Malta Financial Services Authority, has made

the following regulations:-

(1) The title of these regulations is the Insurance

Business (Penalties for Offences and Infringements)

(Amendment) Regulations, 2007, and they shall be read and

construed as one with the Insurance Business (Penalties for

Offences and Infringements) Regulations, 2000, hereinafter

referred to as “the principal regulations” .

(2) These regulations shall come into force on the 1 st June,

2007.

(Regulation 4)

Court Penalties

Second Column

Offence

Carrying on business of insurance in or from Malta

without authorisation

Carrying on business of insurance in or from a country

outside Malta without authorisation

Opening a branch or agency, or setting up or acquiring

any subsidiary in a country outside Malta without the

consent of the Authority

Failure of company to maintain in Malta at all times

assets of such kind and amount as may be prescribed

or determined in accordance with regulations made for

the purposes of the Act

Failure of company to maintain a margin of solvency

or a margin of solvency of the required amount

Carrying on business of insurance where authorisation

is automatically revoked

Carrying on business of insurance where authorisation

is suspended or revoked

Failure of company to furnish the Authority with

information or documentation as required; or with

information or documentation verified in a manner as

specified; or to attend before the Authority, or a

person appointed by the Authority, to answer

questions and provide information or documentation

as required

Second Column

Offence

Failure of company to disclose to the Authority where

information or documentation as required not in the

company’s possession may be found; failure of person

to provide the Authority with information or

documentation in his possession

Failure of officer or agent of a company to produce to

an inspector documents of, or relating to, the

company; or to give an inspector all assistance in

connection with an examination of the affairs of the

company by the inspector

Failure of person to assist the Authority to enter and

search premises to obtain information and

documentation

Transferring company’s rights and obligations under

general business policies, or general business policies

of a description, without the approval of the Authority

Transferring company’s long term business, in whole

or in part, without the approval of the Financial

Services Tribunal

Failure of person to obtain in writing the consent of

the Authority to acquire, increase, reduce or divest

itself of a shareholding in an authorised company

Failure of company and its directors to notify the

Authority of a person’s intention to acquire, increase,

reduce or divest itself of a shareholding in the

company

Failure of directors and qualifying shareholders of an

authorised company to notify the Authority where the

company intends to merge with another company, or

to undergo reconstruction or division, or to increase or

reduce its nominal or issued share capital, or to effect

any material change in voting rights

Failure of person intending to take any of the actions

provided by article 38(1), or of company intending to

take any of the actions provided by article 38(5)

accordingly; or to furnish the information required to

be furnished as may be determined by an insurance

rule made for the purposes of article 38

Second Column

Offence

Failure of company to observe prohibition of free

disposal of the company’s assets, whether such assets

are situated in Malta or elsewhere, in the case of a

company whose head is in Malta, or, in the case of a

company whose head office is in a country outside

Malta, prohibition of free disposal of the company’s

assets situated in Malta or in any other country outside

Malta if such assets relate to the company’s business

in Malta

Without authorisation dissolving and winding up

voluntarily by a company whose head office is in

Malta carrying on long term business

Disclosing of information relating to the affairs of a

company or policyholder of a company other than in

specified circumstances

Exchange of information about policies or

policyholders among insurers, intermediaries and the

police other than for the purposes of preventing,

detecting or suppressing insurance fraud

Obtaining by deceit authorisation under the Act or any

regulations made thereunder

Knowingly being a party to, or procuring or aiding

and abetting, any contravention of any provision of

the Act or any regulations made thereunder or any

insurance rule

Obstructing a person exercising rights conferred by

the Act or any regulations made thereunder

Failure of director, controller, officer or employee of a

company to secure compliance by the company with

any provision of the Act or any regulations made

thereunder, or any authorisation or permit issued

thereunder, or any insurance rule; or to ensure the

correctness of statements made or information given

under any of those provisions; or removes, destroys,

conceals or fraudulently alters any document with

intent to avoid detection of the commission of an

offence under any of those provisions.

Any other offence arising under any provision of the Act not specifically

provided for in this Schedule

Regulation 2 of the principal regulations shall be

amended as follows

(a) for the definition “insurance directive” , there shall be

substituted the following

“ “insurance rule” has the same meaning as is assigned to

it by article 2 of the Insurance Business Act;”; and

(b) immediately after the new definition of “insurance rule”

there shall be added the following new definition

“ “Schedule” means a schedule to these regulations,”.

(Regulation 4)

In this Schedule “Administrative Penalties” are those made under and for the purposes of

article 67(6) of the Act

Administrative Penalties

Second Column

Infringement

Failure of Mutual Association to comply with or to

satisfy the requirements as may be determined by an

insurance rule made for the purpose of article 6

Failure of company to comply with any condition of

authorisation

Failure of company to maintain a margin of solvency

or a Malta margin of solvency or a margin of solvency

or a Malta margin of solvency of the required amount

Failure of company to submit or give effect to a plan

acceptable to the Authority for the restoration of a

sound financial position

Failure of company to notify the Authority upon any

of the margins of solvency falling below the

prescribed amount, or to make good deficiency in any

of the margins of solvency of the company

Failure of company to desist from assuming new risks

when any of the company’s margins of solvency is

deficient

Failure of company to maintain a guarantee fund or a

guarantee fund of the required amount

Transferring, withdrawing or encumbering company’s

assets required to be maintained in Malta either

without permission of the Authority or without

proving to the Authority that the company has no

further liability

Failure of company to establish and maintain annually

adequate technical provisions in respect of the

company’s business in accordance with regulations

made for the purpose of article 20

Second Column

Infringement

Failure of company to hold at all times unencumbered

assets equal to the value of the company’s technical

provisions

Failure of company to ensure that the company’s

assets covering the technical provisions are diversified

and adequately spread in accordance with regulations

made for the purpose of article 63

Failure of company to cover at all times the

company’s technical provisions by equivalent and

matching assets, or to limit non-matching assets to a

prescribed amount in accordance with regulations

made for the purpose of article 63

Failure of company to maintain an equalisation

reserve in respect of general business classes

prescribed by regulations made for the purpose of

article 17 or to maintain such equalisation reserve in

accordance with those regulations

Failure of company to deposit in custody assets of a

prescribed kind or amount with a person prescribed by

regulations made for the purpose of article 18

Failure of company to inform the Authority in writing

of altering its financial year

Failure of company to forward annually to the

Authority a copy of the company’s financial

statements; or to forward such statements within a

specified period or a period as may be authorised by

the Authority; or to forward a copy of such statements

drawn up in accordance with regulations made for the

purpose of article 20; or to publish such statements in

two local daily newspapers; or to publish such

statements in abridged form set out in accordance with

those regulations; or to exhibit those statements within

a specified period or in a manner provided by article

Failure of company to provide a copy of its audited

financial statements to a person applying to the

company for a copy thereof

Failure of company to appoint approved auditor

Second Column

Infringement

Failure of auditor to give notice to the Authority if he

resigns, does not seek re-appointment, qualifies the

audit report or failure to specify reasons in the case of

resignation

Failure of company to give notice to the Authority if it

receives notice of a resolution to appoint as auditor a

person other than the retiring auditor or not to re-

appoint the retiring auditor

Failure of company to notify the Authority in writing,

or to notify the Authority in writing within a specified

period, the reasons for terminating the appointment of

the company’s auditor

Failure of company to change auditor if so required by

the Authority

Failure of company carrying on long term business to

appoint an approved actuary

Failure of company to inform the Authority in writing

within a specified period, of the appointment of an

actuary, or termination of appointment of an actuary,

as actuary of the company

Failure of actuary to give reasons in writing to the

Authority for the termination of his appointment as

actuary of a company

Failure of company carrying on long term business to

cause at the close of the financial year an investigation

to be made into the company’s financial position by

the company’s actuary

Failure of company carrying on long term business to

cause an abstract of an actuary’s report of any

investigation to be made; or to make such abstract

available to the company’s policyholders; or to make

such abstract in the form and content as may be

determined by an insurance rule made for the purpose

of article 23

Failure of company to forward to the Authority a copy

of any actuary’s report, or to forward such report

within a specified period

Second Column

Infringement

Failure of auditor or actuary to inform the Authority

of any of matters, facts and decisions as provided by

article 24

Failure of person to comply with and otherwise give

effect to any directive imposed by the Authority

Failure of company to forward annually to the

Authority a statement in respect of the business

carried on by the company; or to forward such

statement in the form, content and manner as may be

determined by an insurance rule made for the purpose

of article 32

Failure of company to verify the company’s business

statement in a manner as may be determined by an

insurance rule made for the purpose of article 32

Failure of company to forward to the Authority in a

manner as the Authority may direct such business

statement at such interval and for such period as it

may also direct

Failure of company to deposit with the Authority two

office copies of the Tribunal’s approval of transfer of

long term business, in whole or in part, or to deposit

such copies within a specified period

Failure of company to give notice, or to give notice in

a specified period, to the Authority of the company’s

intention to cease to carry on, in whole or in part, the

business it is authorised to carry on

Failure of company authorised to cease to carry on the

business it was authorised to carry on, from desisting

to effect and carry out new contracts of insurance of

the business authorised to cease;

Failure of company authorised to cease to carry on the

business it was authorised to carry on, to service or

run-off contracts of insurance effected and carried out

before the specified date of cessation

Second Column

Infringement

Failure of holder of authorisation to carry on business

of insurance or holder of permit to service or run-off

business of insurance to notify the Authority in

writing of any material change in documentation

provided, or required to be provided, by or under the

Act

Failure of company whose head office is in Malta to

submit to the Authority in writing for the Authority’s

approval particulars of any proposed addition or

alteration to the company’s memorandum or articles

of association or other instrument constituting the

company

Failure of company whose head office is in Malta to

inform the Authority of the names of the persons

holding a qualifying shareholding in the company and

the percentage of such holding in the form, manner

and content within such date as determined by an

insurance rule made for the purposes of article 43

Failure of company to issue contracts of insurance

expressed in a language as may be determined by an

insurance rule made for the purpose of article 47

Failure of company to issue contracts of insurance

expressed in the English language if no other language

is determined by the Authority or no insurance rule is

made for the purpose of article 47

Issuing of advertisements or undertaking of

promotional activities which generally mislead or

deceive policyholders and the public

Failure of authorised company to utilise the services

of insurance intermediaries enrolled under the

Insurance Intermediaries Act or registered with a

supervisory authority of a European insurance

undertaking in a Member State or an EEA State

Second Column

Infringement

Failure of person to satisfy any directive or order

made or given under any provisions of the Act or any

regulations made thereunder; or any requirement of, or

obligation determined by, any provision of any

insurance rule made for the purpose of any article of

the Act other than a article mentioned in this Schedule

and the Third Schedule to the regulations.

Any other infringement against any other provision of the Act or any

regulations made thereunder or any insurance rule not specifically

provided for in this Schedule.

Mitbug[ fl-Istamperija tal-Gvern — Printed at the Government Printing Press

In sub-regulation (2) of regulation 3 of the principal

regulations, the words “or both such fine and imprisonment” shall

be deleted.

Substitutes Second,

For the Second, Third and Fourth Schedule to the

Third and Fourth

principal regulations, there shall be substituted the following

Schedules

“SECOND SCHEDULE

(Regulation 3)

Administrative penalties which may be imposed by the Authority without recourse to a

court hearing

First Column

Second Column

Third Column

Level

Penalty

Daily penalty

not less than Lm50 but

not less than Lm5 but

not more than Lm250

not more than Lm15

not less than Lm100 but

not less than Lm10 but

not more than Lm1,000

not more than Lm30

not less than Lm1,000 but

not less than Lm20 but

not more than Lm40,000

not more than Lm50.