Insurance Business (Exemptions) Regulations, 2015

Suppliment tal-Gazzetta tal-Gvern ta’ Malta, Nru. 19,509, 10 ta’ Diċembru, 2015

L.N. 401 of 2015

INSURANCE BUSINESS ACT

(CAP. 403)

Insurance Business (Exemptions) Regulations, 2015

IN exercise of the powers conferred by articles 6(3)(a) and 64 of

the Insurance Business Act, the Minister for Finance, after

consultation with the Malta Financial Services Authority, has made

the following regulations:-

(1) The title of these regulations is the Insurance Citation, scope

and

Business (Exemptions) Regulations, 2015.

commencement.

(2) The purpose of these regulations is to implement Articles

3, 4, 5, 7, 9(1) and (2), 10(1) and 11 of the Solvency II Directive.

(3) These regulations shall come into force on the 1st January

2016.

Any reference in these regulations to the Act is a reference Interpretation.

to the Insurance Business Act, and the provisions of article 2 of the Cap. 403.

Act shall also apply to these regulations.

(1) Subject to sub-regulations (2) to (4) and pursuant to Applicability of

Article 4 of the Solvency II Directive, an insurance undertaking the Act.

whose head office is in Malta which fulfils all of the following

conditions

(a)

the annual gross written premium income of the

undertaking does not exceed €5,000,000;

(b) the total of the undertaking’s technical provisions,

gross of the amounts recoverable from contracts of reinsurance

and special purpose vehicles, as set out in article 18E of the Act,

does not exceed €25,000,000;

(c)

where the undertaking forms part of a group, the

total of the technical provisions of the group defined as gross of

the amounts recoverable from contracts of reinsurance and

special purpose vehicles does not exceed €25,000,000;

(d) the business of insurance carried on by the

undertaking does not include insurance or reinsurance activities

covering liability, credit and suretyship insurance risks, unless

they constitute ancillary risks within the meaning of article 5(2)

of the Act;

(e)

the business of insurance carried on by the

undertaking does not include reinsurance operations -

(i) exceeding €500,000 of its gross written

premium or exceeding €2,500,000 of its technical

provisions gross of the amounts recoverable from contracts

of reinsurance and special purpose vehicles;

(ii) with more than 10% of its gross written

premium income or more than 10% of its technical

provisions gross of the amounts recoverable from contracts

of reinsurance and special purpose vehicles,

shall be exempt from the requirements of the Solvency II

Directive.

(2) The provisions of the Act, regulations and Insurance Rules

issued thereunder shall apply, subject to such modifications,

variations and conditions as shall be specified by means of Insurance

Rules issued for the purposes of this regulation, to an undertaking

which falls under sub-regulation (1).

(3) Without prejudice to sub-regulation (1), the Act,

regulations and Insurance Rules issued thereunder shall apply in their

entirety to an insurance undertaking which fulfils the conditions

specified under sub-regulation (1), from the fourth year, if any of the

amounts set out in sub-regulation (1)(a), (b), (c) or (e) are exceeded in

each of the three preceding consecutive years after 1 January 2016.

(4) Subject to sub-regulation (6), the Act, regulations and

Insurance Rules issued thereunder shall apply in their entirety, to an

insurance undertaking which, on or after 1 January 2016, seeks to be

granted an authorisation to carry on business of insurance pursuant to

article 7 of the Act, if any of the amounts set out in sub-regulation

(1)(a), (b), (c) or (e) are expected to be exceeded within five years

from the date on which the undertaking has obtained such an

authorisation.

(5) Notwithstanding that an insurance undertaking fulfills all

of the conditions set out in sub-regulation (1), if the undertaking

exercises a European right pursuant to the European Passport Rights

for Insurance and Reinsurance Undertakings Regulations, 2015, the

Act, regulations and Insurance Rules issued thereunder shall apply in

their entirety to such an undertaking.

(6) Where -

(a) an insurance undertaking is not exercising a

European right pursuant to the European Passport Rights for

Insurance and Reinsurance Undertakings Regulations, 2015;

and

(b)

none of the thresholds set out in sub-regulation (1)

(i)

has been exceeded for three consecutive

years; and

(ii) is expected to be exceeded during the

following five years,

the provisions of the Act, regulations and Insurance Rules, as

modified by Insurance Rules issued for the purposes of sub-regulation

(2), shall apply.

The operations falling within this regulation shall not be Operations not

considered as business of insurance for the purposes of the Act and, considered

business of

accordingly, a person carrying out the following operations shall be insurance.

exempted from the requirement to obtain an authorisation in terms of

article 7 of the said Act

(a)

without prejudice to Article 2(3)(c) of the Solvency

II Directive, insurance forming part of a statutory system of

social security;

(b) operations relating to general business of insurance

in relation to

(i)

capital redemption operations;

(ii) operations of provident and mutual benefit

institutions whose benefits vary according to the resources

available and in which the contributions of the members

are determined on a flat-rate basis; or

(iii) operations carried out by organisations not

having a legal personality with the purpose of providing

mutual cover for their members without there being any

payment of premiums or constitution of technical reserves;

(c)

mutual undertakings which carry on general

business of insurance and which have concluded with other

mutual associations an agreement which provides for the full

reinsurance of the insurance policies issued by them or under

which the accepting undertaking is to meet the liabilities arising

under such policies in the place of the ceding undertaking. In

such a case, the accepting undertaking shall not be exempted in

terms of these regulations and shall accordingly be subject to

the requirements of the Solvency II Directive;

(d)

in regard to long term business

(i) operations of provident and mutual benefit

institutions whose benefits vary according to the resources

available and which require each of their members to

contribute at the appropriate flat rate;

(ii) operations carried out by organisations, other

than undertakings referred to in Article 2 of the Solvency

II Directive, whose object is to provide benefits for

employed or self-employed persons belonging to an

undertaking or group of undertakings, or a trade or group

of trades, in the event of death or survival or of

discontinuance or curtailment of activity, whether or not

the commitments arising from such operations are fully

covered at all times by mathematical provisions;

(iii) organisations which undertake to provide

benefits solely in the event of death, where the amount of

such benefits does not exceed the average funeral costs for

a single death or where the benefits are provided in kind;

(e)

the activity of reinsurance conducted or fully

guaranteed by the Government of Malta when such government

is acting, for reasons of substantial public interest, in the

capacity of reinsurer of last resort, including in circumstances

where such a role is required by a situation in the market in

which it is not feasible to obtain adequate commercial insurance

cover.

€0.18