PROTECTION AND COMPENSATION FUND REGULATIONS *

SUBSIDIARY LEGISLATION 403.13

PROTECTION AND COMPENSATION FUND

REGULATIONS *

1st January, 2004;

1st May, 2004

LEGAL NOTICE 435 of 2003, as amended by Legal Notices 426 of 2007,

229 of 2008, 117 of 2011 and 405 of 2015.

PART I

PRELIMINARY

The title of these regulations is the Protection and

Compensation Fund Regulations.

(1)

In these regulations, unless the context otherwise

requires -

''the Act'' means the Insurance Business Act;

''business of motor insurance'' means business of insurance of

group 2 as specified in Part II of the Third Schedule to the Act or

any class or part class thereof;

''competent authority'' means the Malta Financial Services

Authority established by the Malta Financial Services Authority

Act;

''Financial Services Tribunal'' means the Tribunal referred to in

article 57 of the Act;

''the Fund'' means the Protection and Compensation Fund

established by article 49 of the Act;

''gross premiums'', in relation to an insurer and a calendar year,

means premiums after deduction of discounts, refunds and rebates

of premium and premiums receivable by the insurance undertaking

under reinsurance contracts accepted by the undertaking but before

deduction of premiums for reinsurance ceded and before deduction

of commission payable by the undertaking

Provided that, in the case of an insurer which is an

undertaking whose head office is in a country outside Malta, or an

undertaking whose head office is in Malta and carries on business

of insurance in a country outside Malta, the gross premium income

relates to premium income attributable to business of insurance

carried on by the insurer in Malta;

''insolvent insurer'' shall be construed in accordance with

regulation 16(1);

''insurer'', in relation to the Fund, means an insurance

undertaking authorised under the Act to carry on in Malta long term

*These regulations have been repealed by Legal Notice 318 of 2024.

business or general business or an insurance undertaking which on

the date of coming into force of these regulations * is authorised

thereunder to carry on both long term business and general business

whether or not such business is, in each case, combined with

business of reinsurance but excludes an undertaking whose

business is restricted to reinsurance;

''insurer concerned'' has the meaning assigned to it by regulation

24;

''the Management Committee'' and ''the Committee'' mean the

Protection and Compensation Fund Management Committee

established by regulation 5;

''protected commitment'' shall be construed in accordance with

regulation 3(3)(a)(ii);

''protected liability'' shall be construed in accordance with

regulation 3(3)(b);

''protected risk'' shall be construed in accordance with regulation

3(3)(a)(i),

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

have the same meanings as in the Act.

(2) These regulations shall not apply to an authorised

reinsurance undertaking.

PART II

THE PROTECTION AND COMPENSATION FUND

(1) The purposes of the Fund as established by article 49 of

the Act are -

(a) to make payment of any claims in respect of risks

situated in Malta and of commitments where Malta is

the country of the commitment in the amounts

prescribed by these regulations against an insurer,

remaining unpaid by reason of the insolvency of such

insurer;

(b) to make payment of compensation to victims of road

traffic accidents in circumstances prescribed by these

regulations.

(2)

For the purposes of subregulation (1) -

(a) Part III makes provision with respect to payment of

claims in the event of an insolvent insurer; and

(b) Part IV makes provision with respect to compensation

to victims of road traffic accidents.

(3)

There is hereby prescribed -

(a) in relation to Part III

(i)

in respect of risks situated in Malta, any class of

business of insurance specified in Part I of the

*refers to the coming into force of the Protection and Compensation Fund

(Amendment) Regulations, 2015 - 1st January, 2016.

Third Schedule to the Act as a protected risk,

other than the following classes or part classes

1 where the insured is not an individual, 4, 5, 6,

7, 11, 12, 14 and 15;

(ii) in respect of commitments where Malta is the

country of the commitment, any class of

business of insurance specified in the Second

Schedule to the Act as a protected commitment,

other than the following classes

III, V, VI and VIII

subject, in each case, to such limitations and

restrictions prescribed by that Part;

(b) in relation to Part IV, any civil liability to any person

which is required to be covered by a policy of

insurance under compulsory insurance legislation as a

protected liability, subject to such limitations and

restrictions prescribed by that Part.

(1) The Fund shall be a body corporate having a distinct

legal personality and shall be capable, subject to the provisions of

the Act and of these regulations, of entering into contracts of

borrowing or otherwise incurring indebtedness for the purposes of

its functions, of acquiring, holding and disposing of any kind of

property for the purposes of its functions, of suing or being sued,

and of doing all such things and entering into all such transactions

as are incidental or conducive to the exercise or performance of its

functions

Provided that, with respect to any one insolvent insurer, the

amount borrowed should not exceed thirty per centum of the total

amount of payments to be made by the Fund under Part III to all

qualifying persons of the insolvent insurer.

(2) The legal and judicial representation of the Fund shall vest

in the chairperson of the Management Committee

Provided that, the Management Committee may appoint any

one or more of its members or of the officers or agents of the Fund

to appear in the name and on behalf of the Fund in any legal or

judicial proceedings and in any act, contract, instrument or other

document whatsoever; and where Part III or Part IV is in operation,

in respect of any powers and duties of the Fund exercisable by any

body or person as provided in regulation 6(2), the legal

representation of the Fund shall also vest in such body or person or

in the legal representative thereof.

(1) There shall be a management committee to be known

as the Protection and Compensation Fund Management Committee

which shall consist of a chairperson and six members to be

appointed by the competent authority and which shall include

among its members -

(a) an officer, not below the grade of manager, performing

duties with the competent authority possessing the

necessary expertise and experience in business of

insurance;

(b) three persons nominated by an association or other

body representing insurers and recognised for such

purpose by the competent authority, or of insurance

agents acting on behalf of such insurers, of whom, at

least -

(i)

one person who represents insurers whose head

office is in Malta; and

(ii) one person who represents insurers whose head

office is in a country outside Malta, or of

insurance agents acting on behalf of such

insurers;

(c) a person who, because of his experience, qualifications

or activities is considered as being able to state and

represent the point of view of consumers;

(d) an independent person who, in the opinion of the

competent authority, possesses the necessary expertise

and experience in financial services

Provided that, the nomination of persons as is envisaged in

paragraph ( b ) shall be such as to include at all times a

representative of insurers carrying on long term business and a

representative of insurers carrying on general business

Provided further, that such members of the Management

Committee shall serve the Fund in their own personal capacity and

shall not represent or receive directives or instructions from the

person or entity nominating them. All members of the Committee

shall work in the best interest of the Fund and shall pursue and

promote its purposes.

(2) Whenever, for any reason whatsoever, the association or

other body representing insurers referred to in subregulattion (1)(b)

fails to nominate, within the time given to it for such purpose by

the competent authority the persons, or any of the persons, which it

is required to nominate under that subregulation, the competent

authority shall appoint the persons, or the remaining persons,

having regard to the nomination provisions of subregulation (1).

(3) A person nominated by an association or other body

representing insurers shall not be eligible for appointment if he has

a financial or other interest as is likely to affect prejudicially the

discharge by him of his functions under these regulations.

(4) Every member of the Committee shall hold office,

including the office of chairperson, for such period and upon such

terms and conditions as may be determined by the competent

authority and indicated in the letter of appointment, such term of

office being not less that one year and not more than three years.

Every member of the Committee, including the chairperson, shall

be eligible for re-appointment.

(5) A member of the Committee may be relieved of office by

the competent authority on the grounds of inability to perform the

functions of his office, whether due to infirmity of mind or of body,

or to any other cause, or of misbehaviour; and for the purposes of

this subregulation, repeated and unjustified non-attendance of the

meetings of the Management Committee may be deemed to amount

to misbehaviour.

(6) A member of the Committee may resign from office by

letter addressed to the competent authority.

(7) The competent authority shall fill any vacancy occurring in

the Committee for any reason whatsoever as early as the vacancy

occurs; and in so doing, the competent authority shall have regard

to the nomination provisions of subregulation (1).

(8) Notice of the names of the members of the Committee and

of any resignation, dismissal and new appointment shall be

published in the Gazette.

(9) The Committee may act notwithstanding any vacancy

among its members but shall conduct business only if at least four

members are present.

(10) Whenever at any meeting of the Committee the chairperson

is absent, the members present for that meeting shall elect from

among themselves a person to act as chairperson and to conduct the

proceedings of that meeting.

(11) Decisions of the Committee shall be taken by a majority of

votes of the members present. The chairperson shall have an

original vote and, in the event of an equality of votes, a second or

casting vote.

(12) Subject to the provisions of the Act and of these

regulations, the Committee shall have power to regulate its own

proceedings and may also establish such procedures or make such

rules as it may deem appropriate for the better fulfilment of its

purposes.

(13) Subject to subregulation (14), the Committee shall pay to

the chairperson and each member of the Committee such

remuneration as it may determine.

(14) Any determination of the Committee with respect to the

remuneration to be paid to the chairperson and to any member of

the Committee shall be subject to the approval of the competent

authority.

(15) The competent authority shall appoint one of its officers to

serve as secretary to the Management Committee. Such person

shall be responsible to make the necessary preparations for the

meetings of the Committee and to keep the minutes thereof.

(1) The Fund shall be administered by and be under the

general control of the Management Committee.

(2) Subject to the provisions of subregulation (1), the

Management Committee shall have the power to appoint officers or

agents of the Fund and to grant them such powers or authority as it

ma y de e m a pp ro p ri a t e . I n c on s ul t a ti o n wi th th e c om p e t e nt

authority, the Committee may, for the better fulfilment of its

purposes, cause any part of its business to be conducted on its

behalf by such body or person and under such arrangements or

agreements as it may deem appropriate.

(3) The Management Committee shall not enter into an

agreement or arrangement as is envisaged in subregulation (2) in

respect of the purpose set out in regulation 3(1)(b), unless there is

in force and in a m anner satisfactory to the Comm ittee, an

agreement among insurers carrying on business of motor insurance,

binding on all parties thereto and requiring them to act as insurers

concerned; and where any such agreement between insurers ceases

to be operative, or to be satisfactory to the Committee, any

agreement or arrangement entered into by the Committee under this

regulation shall cease to have effect upon notice in writing by the

Committee to such person as may lawfully receive notices on

behalf of the body with which the arrangement or agreement was

made.

(4) Where an arrangement or agreement as is envisaged in

subregulation (3) has been entered into by the Committee, and for

so long as such arrangement or agreement is in operation, Part III

shall have effect if the arrangement or agreement relates to the

purpose set out in regulation 3(1)(a) and Part IV shall have effect if

the arrangement or agreement relates to the purpose set out in

subregulation (1)(b) of the said regulation.

(5) The competent authority may issue Insurance Rules to

determine such incidental, supplementary and consequential

p r o v i s i o n s a s a p p e a r n e c e s s a r y f o r t h e p e r f o r m a n ce o f t h e

Management Committee’s functions and conduct of its business

under any provisions of these regulations.

(1) The contributions to the Fund to be made by insurers

pursuant to article 50 of the Act are those prescribed by this

regulation.

(2) Subject to the provisions of the following subregulations,

the Committee shall in every calendar year -

(a) for the purpose of the Fund under regulation 3(1)(a)

(i)

in so far as that purpose relates solely to general

business, require every insurer carrying on in

Malta general business, whether or not such

business constitutes, in whole or in part,

business of a protected risk, to pay a

contribution to the Fund to be utilised

exclusively for the payment of claims relating to

protected risks situated in Malta;

(ii) in so far as that purpose relates solely to long

term business, require every insurer carrying on

in Malta long term business, whether or not such

business constitutes, in whole or in part,

business of a protected commitment, to pay a

contribution to the Fund to be utilised

exclusively for the payment of claims relating to

protected commitments where Malta is the

country of the commitment;

(b) for the purpose of the Fund under regulation 3(1)(b),

require every insurer carrying on business of motor

insurance in Malta, to pay, in addition to the

contribution required to be made under paragraph (a)

of this subregulation, a further contribution to the

Fund, of such amount, and at such time or times, as the

Committee may determine, taking into account the

sums required, or expected to be required, for this

purpose of the Fund, to be utilised exclusively for the

payment of compensation relating to protected

liabilities.

(3) The obligation to pay contributions under subregulation

(2)(a)(ii) shall also apply to an insurer, other than an insolvent

insurer which was licensed under the Insurance Business Act, 1981,

repealed by the Act, or is authorised under the Act to carry on

business of long term insurance, whether or not such business

constitutes, in whole or in part, business of a protected commitment

and which ceased to carry on that business and is carrying out

servicing of that business, or which ceases to carry on that business

and shall carry out servicing of that business. The obligation to pay

contri butions shall continue until the insurer proves to the

satisfaction of the competent authority that it has no further

liability arising from such business.

(4) Without prejudice to subregulation (3), where an insurer

holds an authority on the date of coming into force of these

regulations to carry on in Malta both long term business and

general business, separate treatment shall be given to contributions

paid by the insurer into the Fund under this regulation -

(a) in respect of long term business, to be utilised

exclusively for the payment of claims relating to

protected commitments where Malta is the country of

the commitment;

(b) in respect of general business, to be utilised

exclusively for the payment of claims relating to

protected risks situated in Malta.

(5) Subject to the provisions of regulation 9, the amount every

insurer shall be required to contribute under subregulation (2)(a)

shall be

(a) if the contribution is made under subparagraph (i)

thereof, 0.125 per centum of, and calculated by

reference to, the gross premium income by the insurer

for the year ending last before the beginning of that

calendar year in respect of general business;

(b) if the contribution is made under subparagraph (ii)

thereof, 0.125 per centum of, and calculated by

reference to, the gross premium income by the insurer

for the year ending last before the beginning of that

calendar year in respect of long term business effected

after 30 June 1986

Provided that, the gross premium income shall exclude

premiums which relate to the following classes of business of

insurance

(i)

in respect of risks situated in Malta classes 4, 5,

6, 7, 11, 12, 14 and 15 in Part I of the Third

Schedule to the Act;

(ii) in respect of commitments where Malta is the

country of the commitment classes III, V, VI and

VIII in the Second Schedule to the Act.

(6) A sum not exceeding 5 per centum of the total amount of

contributions payable to the Fund under subregulation (2) as may

be determined by the Management Committee shall be at the

disposal of the Committee to meet ordinary expenses incurred by

the administration of the Fund, other than extraordinary expenses

incurred in relation to the purposes specified in regulation 3(1)(a).

(7) Expenses incurred by the Fund pursuant to, or in

consequence of, regulation 3(1)(a) shall be paid out

(a) in relation to protected risks situated in Malta, from

the contributions made in respect of general business;

and

(b) in relation to protected commitments where Malta is

the country of the commitment, from the contributions

made in respect of long term business.

(8) The contributions payable by every insurer under

subregulation (2) shall be due on the first day of July of each

calendar year but may be paid on any working day during that

month.

(9) Any contribution payable under this regulation remaining

unpaid by any insurer for any reason whatever, other than by reason

of the insolvency of the insurer, shall be recoverable by the Fund

from the insurer in the same manner as an administrative penalty is

recoverable by the competent authority under the regulations made

for the purposes of article 67(6) of the Act, and, in any such

recovery, any reference to ''the competent authority'' made in those

regulations shall be deemed to be a reference to ''the Fund''.

(1) Every insurer shall, when satisfying its obligations

under regulation 7, furnish the Fund with a statement of the gross

premium income of the undertaking liable to the contribution -

(a) in respect of general business, under regulation

7(5)(a);

(b) in respect of long term business, under regulation

7(5)(b).

(2) Where an insurer is required under this regulation to furnish

to the Fund a statement in respect of gross premium income of

more than one kind of business mentioned in subregulation (1)(a)

and (b), the insurer shall furnish a separate statement in respect of

gross premium income of each kind of business.

(3) Any person who causes or permits to be included in a

statement furnished to the Fund under this regulation any

information which he knows to be false in a material particular or

recklessly causes or permits to be so included any information

which is false in a material particular, shall be guilty of an offence

and liable, on conviction, to a fine (multa) of not less than one

thousand and one hundred and sixty-four euro and sixty-nine cents

(€1,164.69) but not exceeding two thousand and three hundred and

twenty-nine euro and thirty-seven cents (€2,329.37).

(4) Any insurer which makes default in complying with

subregulation (1) or (2) shall be guilty of an infringement and liable

to an administrative penalty of not less than one thousand and one

hundred and sixty-four euro and sixty-nine cents (€1,164.69) but

not exceeding two thousand and three hundred and twenty-nine

euro and thirty-seven cents (€2,329.37) and in the case of a

continuing infringement to a further penalty not exceeding one

hundred and sixteen euro and forty-seven cents (€116.47) for each

day during which the infringement continues.

(5) Any administrative penalty imposed by the competent

authority under subregulation (4) shall be recoverable by the Fund

in the same manner and to the same extent as an administrative

penalty is recoverable by the competent authority under regulations

made for the purposes of article 67(6) of the Act; and, in any

recovery, any reference to the ''competent authority'' made in those

regulations shall be deemed to be a reference to ''the Fund''.

(1) Subject to subregulation (2), whenever the funds held

by the Management Committee in respect of the purpose of

regulation 3(1)(a) amount to two million and three hundred and

twenty-nine thousand and three hundred and seventy-three euro

and forty cents (€2,329,373.40) in respect of general business and

two million and three hundred and twenty-nine thousand and three

hundred and seventy-three euro and forty cents (€2,329,373.40) in

respect of long term business, the Management Committee shall

inform the competent authority in writing of this fact.

(2) Notwithstanding that the funds held by the Committee in

respect of each kind of business are not equal to the amount

determined in subregulation (1), if at any time it appears to the

Committee that the funds held by it are reasonably adequate for it

to exercise its functions with respect to the purpose mentioned in

subregulation (1), the Committee shall draw up a report on the

adequacy of such funds stating the reasons for its consideration and

shall submit that report to the competent authority.

(3) Whenever the competent authority receives information or

a report as is envisaged in subregulations (1) and (2), the competent

authority shall, after consultation with the Management Committee

and the auditor of the Fund, direct the Committee in writing -

(a) to continue to exercise its functions and powers under

regulation 7 with respect to contributions to the funds

made under subregulation (6) of this regulation and to

require the contributions payable thereunder to

continue to be paid

(i)

according to the percentage specified in the said

regulation; or

(ii) according to a percentage lower than the

percentage specified in the said regulation as the

competent authority

shall

specify

in

the

directive, or

(b) to suspend exercising its functions and powers under

the said regulation with respect to contributions to

such funds in respect of such business for a period of

one or more years as the competent authority shall

specify in the directive.

(4) Whenever, and for so long as, payment of the contributions

under regulation 7(5) is suspended, every insurer, other than an

insolvent insurer, to which that directive applies shall pay to the

Fund a contribution of six hundred and ninety-eight euro and

eighty-one cents (€698.81) and such contribution shall be paid in

the month of January of each year and be at the disposal of the

Management Committee to meet ordinary expenses incurred by the

administration of the Fund as in envisaged in regulation 7(6).

For the purpose of this subregulation, ''insurer'' shall

include an insurer which was licensed under the Insurance Business

Act, 1981, repealed by the Act, or is authorised under the Act to

carry on business of long term insurance, whether or not such

business constitutes, in whole or in part, business of a protected

commitment and which ceased to carry on that business and is

carrying out servicing of that business, or which ceases to carry on

that business and shall carry out servicing of that business.

(5) Whenever payment of contributions under regulation 7(5) is

suspended, every insurer authorised under the Act to carry on

business of insurance in Malta, on or after the date of enforcement

o f s uch s u s pe ns i o n, s h a l l p a y t o t he F u n d t he co n tr i b ut io n

established by regulation 7(5) for a period to be determined by the

Management Committee in consultation with the competent

authority.

(6) If, for so long as the directive issued by the competent

authority under subregulation (3) is in operation, whenever it

appears to the Management Committee that the circumstances

which led to the issuing of the directive have changed substantially

or materially so that the funds held by the Fund are inadequate for

t h e C o m m i t te e t o e xe r c i s e i t s fu n c t i on s f o r t h e p ur p o s e o f

regulation 3(1)(a), the Committee shall, without delay, inform the

competent authority of such change and of the new circumstances,

and, on receiving that information, the competent authority shall

forthwith modify or revoke its directive with respect to

contributions to those funds.

(1) Notwithstanding any provisions of these regulations, if

the Management Committee is required to make any payment or to

incur any other expenditure under any provision of Part III or Part

IV at a time when the funds available to it for expenditure under

that provision, together with any other funds which are available to

it from other sources, including funds borrowed in terms of

regulation 4(1) and which might be applied to such expenditure,

fall short of what is prescribed or required, the Committee may

then, in such a case, request every insurer to make good the

shortfall by such amount and within such time as it may determine,

subject to the provisions of regulation 7(2) and (3).

(2) The Management Committee shall notify the competent

authority where an insurer fails to comply with the obligations

imposed on it under subregulation (1) and the competent authority

shall take all measures appropriate including the imposition of an

administrative penalty of the amount determined in regulation 8(4),

to ensure that the insurer meets such obligations.

(1) The Management Committee shall every calendar year,

and not later than five months after the end of its financial year,

submit to the competent authority a report on the activities of the

Fund during such year.

(2) A copy of the audited balance sheet and profit and loss

account for the said year, as well as a copy of the auditor’s report,

shall be attached to the report of the Committee.

(3) A copy of the report of the Management Committee

together with all documents attached to it shall be distributed

among insurers contributing to the Fund.

The financial year of the Fund shall be an accounting

period of twelve months ending on the thirty-first day of December

of each year.

(1) The Management Committee shall cause proper books

of account to be kept with respect to -

(a) all sums of money received and disbursed by the Fund

and the matters in respect of which the receipt and

disbursements take place;

(b) the assets and liabilities of the Fund.

(2) Subject to the provisions of article 50 of the Act and

without prejudice to any separate treatment to be given under those

provisions, separate accounts shall also be kept in respect of each

separate purpose of the Fund; and all income derived in respect of

any of such purposes shall be utilised exclusively for disbursements

relating to such purpose

Provided that, notwithstanding the provisions of regulation

7(6) and regulation 9(4), nothing in this subregulation shall prevent

the payment of sums belonging to the Fund to meet administrative,

legal, judicial or other costs common to two or more purposes,

subject to such costs being properly apportioned between such

purposes.

(3) The books of account shall be kept at the offices of the

Fund or at such other place or places as the Management

Committee thinks fit.

(4) The provisions of article 181 of the Companies Act shall, in

so far as they are not incompatible, apply to the balance sheet and

profit and l oss account of the Fund by the substitution for

references to ''company'' and ''directors'' in those provisions of

references to ''the Fund'' and ''members of the Management

Committee'' respectively.

(1) Once at least in every financial year, the accounts of

the Fund shall be examined and the correctness of every balance

sheet and profit and loss account shall be certified by an auditor

appointed by the Committee.

(2) The profit and loss account shall be annexed to the balance

sheet, and the auditor’s report shall be attached thereto. A copy of

the profit and loss account, balance sheet and auditor’s report shall

be submitted to the competent authority within five months from the

end of the financial year.

(3) A copy of every balance sheet and profit and loss account,

together with a copy of the auditor ’s report, shall be published

within five months from the end of the financial year in two local

daily newspapers, of which one is published in the Maltese

language and the other in the English language, and shall, together

with the report on the activities of the Fund for that year made

under regulation 11(1), be made available to the public on request.

An insurer on whom an administrative penalty has been

imposed under any provisions of these regulations, may within a

period of thirty days beginning from the date of service of a notice

imposing such penalty, appeal to the Financial Services Tribunal in

accordance with the provisions of article 58 of the Act.

PART III

PAYMENT OF CLAIMS IN THE EVENT

OF INSOLVENT INSURERS

(1) Whenever an insurer is unable to meet its obligations,

the Committee may, in respect of the said obligations arising from a

claim under a policy of insurance covering a protected risk situated

in Malta or a protected commitment where Malta is the country of

the commitment, make payments out of the Fund, under and in

accordance with the provisions of this Part, to a qualifying person.

(2) Payment shall also be made out of the Fund under this Part

if the insolvent insurer, is at the time that it is unable to meet its

obligations, servicing or running-off the business of insurance it

was licensed to carry on under the Act.

(3) No payment shall be made out of the Fund under this Part

unless the Committee is satisfied that the name of the insolvent

insurer is struck off the register or the insolvent insurer is definitely

wound up.

(4) For the purposes of these regulations, a person is a

qualifying person in relation to an insolvent insurer if -

(a) he is an insured of the insolvent insurer eligible for

protection under this regulation; or

(b) he is a person other than the policyholder to whom

payment in respect of any sums falling due under the

policy could have been made in accordance with the

policy; or

(c) he is a person to whom the insolvent insurer is liable to

pay any sum or other consideration in respect of the

insured’s legal liability to such person under the policy

of insurance.

In the case of long term business protected commitments,

payment shall be made to every qualifying person; and in the case

of general business protected risks, payment shall be made to every

qualifying person who is an individual and to every non-corporate

body or association of persons if all such persons are individuals.

In respect of a protected liability which is a liability

required to be covered by compulsory insurance legislation as

defined in Part IV, payment under this Part in respect of protected

liabilities aforesaid incurred by the insured of an insolvent insurer

shall cover the whole of such liabilities; in respect of all other

protected liabilities, payment under this Part in respect of -

(a) long term business protected commitments shall be

limited to seventy-five per centum of the actuarial

valuation of the contract of insurance at the time the

undertaking concerned ceased to carry on such

business (adjusted for any premiums paid till date of

payment) remaining unpaid or twenty-three thousand

and two hundred and ninety-three euro and seventy-

three cents (€23,293.73) whichever is the less;

(b) general business protected risks shall be limited to

seventy-five per centum of the liabilities incurred

remaining unpaid in any one case or twenty-three

thousand and two hundred and ninety-three euro and

seventy-three cents (€23,293.73) whichever is the less

Provided that, in each case, the total amount of payments to

be made by the Fund under this Part with respect to any one

insolvent insurer shall not exceed two million and three hundred

and twenty-nine thousand and three hundred and seventy-three

euro and forty cents (€2,329,373.40).

(1) In no case shall any payment be made under this Part -

(a) where the claim is in respect of unearned premiums;

(b) where the claim is by or in respect of a person who is a

shareholder of the insolvent insurer and holds twenty

per centum or more of the issued shares of such

insolvent insurer.

(2) Where the Management Committee is of the opinion that an

applicant is not entitled to compensation in whole or in part, the

Committee shall give notice in writing of that opinion to such

applicant and the reasons therefor.

In considering compensation to any applicant for payment

under this Part, the Committee shall take into account any other

amount of compensation paid to the applicant in respect of the

same liability under the Act or any other law and in calculating the

amount in respect of which the insolvent insurer is unable to meet

its liabilities, deduct from the insolvent insurer’s liability any such

amount of other compensation paid.

No payment shall be made under this Part unless and until

the applicant for payment has assigned to the Fund any right to any

payment to which he may be entitled in respect of the same

liability; and, where such liability is covered by reinsurance, the

Fund shall, in addition, be entitled to pursue any reinsurance

recoveries as if it were the insolvent insurer.

This Part shall not apply -

(a) to an insolvent insurer who carries on solely and

exclusively business of insurance restricted to any one

class or part class and such class or part class is, under

these regulations, neither a protected risk nor a

protected commitment; or

(b) to a branch of a European insurance undertaking

carrying on business of insurance pursuant to

regulations relating to European passport rights for

insurance undertakings as may be made in terms of

article 64 of the Act, and which provides to the

satisfaction of the competent authority that equivalent

protection is available to policyholders of protected

risks and protected commitments in a manner not

being less favourable than that prescribed by this Part,

in the event of the insolvency of the European

insurance undertaking.

PART IV

COMPENSATION TO VICTIMS

OF ROAD TRAFFIC ACCIDENTS

(1) In this Part of these regulations, unless the context

otherwise requires -

''the Bureau'' means the association or other body established by

insurers carrying on business of motor insurance with which the

Management Committee has made arrangements or an agreement

as provided in regulation 6(2);

''civil liability'' means any liability which may be incurred in

respect of the death of, or bodily injury to, any person or in respect

of any loss of, or damage to, any property of any person which is

required to be covered by a policy of insurance under compulsory

insurance legislation;

''compulsory insurance legislation'' means the Motor Vehicle

Insurance (Third-Party Risks) Ordinance, or any enactment

replacing that law, and any regulations made thereunder;

''debtor'' means a person responsible for the accident which gave

rise to civil liability;

''insurance'' means insurance against civil liability effected by or

under a policy of insurance, a cover note, correspondence or any

other means, whether or not a certificate of insurance as required

by compulsory insurance legislation has been issued or delivered;

''ju dgem ent'' m eans a ju dgem ent o f a co urt of comp etent

jurisdiction in Malta or in any European state, which has become

res judicata.

(2) To the extent of any powers and duties arising from any

arrangements or agreement entered into by the Management

Committee and the Bureau under regulation 6, the expression ''the

Fund'' in this Part shall include the Bureau.

(1) Subject and without prejudice to the other provisions

of this regulation, ''insurer concerned'' means the insurer who at the

time of the accident which gave rise to a civil liability was

providing insurance against such liability in respect of the vehicle

arising out of the use of which the liability of the debtor was

incurred.

(2)

An insurer is the insurer concerned notwithstanding that -

(a) the insurance was arranged after the accident giving

rise to a civil liability but purported to be effective at

the time of such accident; or

(b) the

insurance

was

obtained

by

fraud,

misrepresentation, non-disclosure of material facts or

mistake; or

(c) some term, description, limitation, exception or

condition (whether expressed or implied) of the

insurance or of the proposal form on which it is based

expressly or by implication excludes the insurer’s

liability whether generally or in the particular

circumstances which gave rise to the liability of the

debtor; or

(d) the debtor was in unauthorised possession of the

vehicle arising out of the use of which the liability of

the debtor was incurred; or

(e) the vehicle out of the use of which the civil liability of

the debtor arose was, at the time when the liability was

incurred -

(i)

being used for a purpose not authorised under

the terms of the insurance; or

(ii) being used by a person not authorised to drive

the vehicle under the terms of the insurance

Provided that an insurer shall not be considered as

the insurer concerned in the circumstances referred to

in subparagraph (ii), if the death, bodily injury or

damage to property is sustained by a person who

voluntarily entered the vehicle which caused such

death, bodily injury or damage to property when the

insurer concerned can prove that such person knew it

was uninsured;

(f)

the driver of the vehicle out of the use of which the

civil liability of the debtor was incurred was, at the

time when the liability was incurred, disqualified from

holding or obtaining a licence to drive the vehicle or

had his licence suspended or had never validly held

such licence.

(3)

An insurer is not the insurer concerned -

(a) when the insurance was cancelled before the date on

which the civil liability was incurred by agreement

between the parties to the insurance and with the prior

written permission of the Commissioner of Police; or

(b) when the civil liability was incurred after the

cancellation of the insurance under a power of

cancellation contained in such insurance and after

notice of such cancellation was given to the

Commissioner of Police in accordance with

compulsory insurance legislation; or

(c) when the insurance has ceased to be operative before

the date on which the civil liability was incurred by

reason of a transfer of interest in the vehicle which the

insurance purports to cover; or

(d) when the civil liability was incurred after a decision of

a court of competent jurisdiction which has become res

judicata has declared the insurance void or

unforceable; or

(e) when the civil liability was incurred after the date on

which the insurance has, by its term, lapsed.

(4) For the purposes of these regulations, an insurer of a motor

trade road risk insurance covering unspecified vehicles shall, in

respect of such vehicles and irrespective of the basis of the

insurance, be the insurer concerned -

(a) in respect of vehicles not the property of the insured, if

the vehicle in respect of which the claim arises was in

the custody or control of the insured or was only

removed from such custody or control without the

authority of the insured; and

(b) in respect of vehicles which are the property of the

insured, at all times, except that such insurer shall not

be the insurer concerned in respect of any vehicle

specifically excluded from the cover of the insurance

by reference to its registration mark and number, or

specifically insured in the name of the motor trader

with another insurer; and

where an insurer concerned under a motor trade risk insurance as

aforesaid and an insurer concerned under a specified vehicle

insurance are both involved in circumstances in which neither

insurance is liable under its insurance, each of them shall be liable

jointly and severally for any amount due by way of damages and

costs in respect of any civil liability, such amount being due in the

internal relations between such insurers as to one half each.

(5) Where a person entering Malta is insured, or holds a policy

purporting to provide insurance, against civil liability and such

insurance was lawfully issued in or from a country outside Malta

by an insurer, or a subsidiary or associated company of an insurer,

the company issuing the insurance shall be the insurer concerned in

the event of the person insured becoming a debtor.

(6) For the purposes of this regulation a ''motor trade road risk

insurance'' means a policy of insurance provided to a person

engaged in t he purchase, sale, r epair, upkeep, servicing or

maintenance of motor vehicles which indemnifies him in respect of

liabilities to third parties arising out of the use of vehicles owned

by him or in his custody or control whilst being used on the road.

(1) If a judgement in respect of any civil liability which is

required to be covered by a policy of insurance under compulsory

insurance legislation is obtained against any person or persons and

either at the time of the accident giving rise to such liability there is

not in force a policy of insurance as required by the said legislation

or such policy is ineffective for any reason other than the inability

of the insurer to make payment, and any such liability is not

satisfied in full within twenty-eight days from the date upon which

the person or persons in whose favour such judgement was given

became entitled to enforce it, then, if there is no insurer concerned,

the Fund shall, subject to the provisions of these regulations, make

payments to the person or persons in whose favour such judgement

was given, out of its funds set aside for utilisation for the payment

of compensation relating to protected liabilities

Provided that no payments shall be made under this

regulation where the judgement relates to a vehicle the use of

which is covered by a security (or in lieu of such security by a

deposit) in accordance with compulsory insurance legislation

unless there is also in force, in respect of such vehicle, a policy of

insurance purporting to cover such use of the vehicle.

(2) No payment shall be made under this regulation unless the

following conditions concur

(a) notice of the proceedings in which the judgement is

given has been given in writing by registered post or

by a judicial letter, within seven days after the

commencement of such proceedings by the plaintiff in

such proceedings

(i)

to the insurer, in any case in which there was in

force at the time of the accident a policy of

insurance purporting to cover the use of the

vehicle, and such fact was known to the said

plaintiff; or

(ii) to the Bureau in any other case;

(b) the plaintiff has complied with all the requirements of

the Fund in relation to any matter which could affect

the payment of compensation by the Fund under these

regulations;

(c) the judgement or judgements and all rights thereunder

have been ceded to the Fund;

(d) the plaintiff in any of the aforesaid proceedings had

given credit to the Fund for any amount paid to him by

or on behalf of the defendant in such proceedings in

respect of any civil liability arising out of the event in

respect of which compensation may be payable by the

Fund.

(3) In the case of payments relating to damage to property

caused by an uninsured vehicle, the Fund shall apply an excess of

four hundred and sixty-five euro and eighty-seven cents (€465.87)

with respect to each and every payment.

(1) Payment of compensation in respect of civil liability to

any person, caused by or arising out of the use of a motor vehicle,

other than payment of compensation falling within the provision of

regulation 25, may be made out of funds set aside by the Fund for

the payment of compensation relating to protected liabilities, if the

following conditions concur

(a) the applicant for payment is unable to trace any person

responsible for the civil liability;

(b) the civil liability was caused in such circumstances

that on the balance of probabilities the unidentified

person would be liable to pay damages to the applicant

in respect of such civil liability;

(c) the liability of the unidentified person to pay damages

to the applicant is one which is required to be covered

by insurance or security under compulsory insurance

legislation, it being assumed for this purpose, in the

absence of evidence to the contrary, that the vehicle

was being used in circumstances in which the user was

required by the said legislation to be insured or

secured against third party risks;

(d) the civil liability was not caused by the use of the

vehicle by the unidentified person as a weapon, that is

to say in a deliberate attempt to run down the deceased

or injured person; and

(e) the application for compensation is made in writing

within two years from the date of the occurrence of the

accident giving rise to the civil liability.

(2) Where an application for compensation is made under this

regulation, the payment that may be made by the Fund as aforesaid

shall be of such amount as a court in Malta applying Maltese law

would assess as damages which the applicant would have been

entitled to recover from the unidentified person in respect of that

civil liability, if proceedings to enforce a claim for damages in

respect thereof had been successfully brought by the applicant

against the unidentified person. The Fund shall only be liable to

pay up to such limits of liability as may be prescribed under

compulsory insurance legislation. The Fund when assessing an

application for compensation shall -

(a) have the power to require any applicant to provide

such information as it may deem necessary for the

purposes of determining an application for granting

compensation; and

(b) on the basis of information provided at its request by

the applicant, give him a reasoned reply regarding the

payment of any compensation.

(3)

No payment under this regulation shall be made unless -

(a) the applicant has given all such assistance, including

information required under subregulation (2) as may

reasonably be required by or on behalf of the Fund to

enable any investigation to be carried out; and

(b) the applicant has assigned to the Fund any right to any

payment in respect of the civil liability to which his

application relates.

(4) Payments relating to damage to property shall only be made

where the Fund has paid compensation for significant personal

injuries to victims of the same accident in which damage to

property was caused by the use of a vehicle by an unidentified

person. In such cases, the Fund shall apply an excess of five

hundred euro (€500) for which the person suffering such damage to

property may be responsible.

(5) For the purposes of determining the conditions in which

personal injuries are to be considered ''significant'', there shall be

taken into account, inter alia, whether the injury has required

hospital care.

(6) The Fund shall determine an application for compensation

un d e r t h is r e g ul a t i on w i t hi n t hr e e m o n th s of r e c e iv i ng t h e

information required to be submitted under this regulation and if it

refuses to effect compensation, it shall inform the applicant in

writing of the reasons for its refusal.

(1) In the case of an accident arising from the use of a

stolen vehicle or a vehicle obtained by violence, and giving rise to

civil liability, compensation by the Fund to the injured party shall

be made in the circumstances referred to in article 12(3) of the

Motor Vehicles Insurance (Third-Party Risks) Ordinance (in this

regulation referred to as ''the Ordinance'')

Provided that, if the civil liability relates to damages to

property, the Fund shall apply an excess of two hundred and thirty-

two euro and ninety-four cents(€232.94) with respect to each and

every payment.

(2) For the purposes of subregulation (1), ''injured party'' has

the same meaning as is assigned to it in article 2 of the Ordinance.

No payment for compensation in respect of civil liability

may be made under these regulations where -

(a) at the time of the accident the person -

(i)

being the owner of or being a person using the

vehicle, was using, or causing or permitting the

vehicle to be used, without there being in force

in relation to such use a policy of insurance or

such security as would comply with the

compulsory insurance legislation, knowing or

having reason to believe that no such policy or

security was in force; or

(ii) was allowing himself to be carried in a vehicle

knowing or having reason to believe that the

vehicle had been taken without the consent of

the owner or other lawful authority, unless he

believed or had reason to believe that he had

lawful authority to be carried or would have had

the owner’s consent if the owner had known of

the fact and the circumstances of his carriage, or

unless he had learned of the circumstances of the

taking of the vehicle after the journey had

commenced and he could not reasonably be

expected to alight from the vehicle; or

(iii) who sustained the death, bodily injury or

damage to property, voluntarily entered the

vehicle which caused such death, bodily injury

or damage when the Fund can prove that such

person knew it was uninsured;

(b) pursuant to the Insurance Business Security Fund

Regulations 1986, repealed by these regulations, the

death or injury in respect of which compensation

would otherwise be payable occurred before the 1st of

July, 1986.

Where the Fund is of the opinion that an applicant is not

entitled to compensation in whole or in part, under this Part, the

Fund shall give notice in writing to such applicant of the opinion

and the reasons therefor.

(1) The competent authority may issue Insurance Rules to

insurers for the purposes of these regulations.

(2) Such insurance rules may contain such incidental,

supplementary and consequential provisions as appear to the

competent authority to be expedient for the purposes of these

regulations.

PART V

SUPPLEMENTARY

(1) Notwithstanding any other provision of these

regulations, the Security Fund Committee appointed by the

Minister under regulation 6 of the Insurance Business Security

Fund Regulations, 1986, repealed by these regulations, (hereinafter

in these regulations referred to as ''the 1986 Regulations'') shall

continue i n office as if the Security F und C ommittee were

appointed by the competent authority under regulation 5 of these

regulations, and the Bureau with which the Security Fund

Committee had made an agreement under regulation 6(2) of the

1986 Regulations shall also continue in office as if the

Management Committee had made the agreement with the Bureau

under regulation 6(2) of these regulations until -

(a) in the case of the Security Fund Committee, the

competent authority shall, pursuant to regulation 5 of

these

regulations,

appoint

the

Management

Committee; and

(b) in the case of the Bureau, the Management Committee

shall, pursuant to regulation 6(2) of these regulations,

make arrangement or agreement as is envisaged

therein with such body or person as it may deem

appropriate.

(2) Where, immediately after the date of coming into force of

these regulations -

(a) a company licensed under the Insurance Business Act,

1981, repealed by the Act, to carry on in Malta the

business of insurance as principal, was, immediately

before that date, in a state of insolvency in accordance

with the 1986 Regulations, and the Security Fund

Committee or the Management Committee, as the case

may be, was or is required, in respect of such of the

obligations as may arise from a policy of insurance

issued in Malta by that company, to make payments

out of the Protection and Compensation Fund, the

Security Fund Committee or the Management

Committee shall -

(i)

in its consideration of the obligations, be

governed by Part II of the 1986 Regulations; and

(ii) in its consideration of the contributions, be

governed by regulation 7 of Part I of the 1986

Regulations;

(b) a claim for compensation out of the Protection and

Compensation Fund was, immediately before that date,

made or was ought to be made, the Security Fund

Committee or the Management Committee shall -

(i)

in its consideration of the claim, be governed by

Part III of the 1986 Regulations; and

(ii) in its consideration of the contributions, be

governed by regulation 7, of Part I of the 1986

Regulations.

(3) All assets and liabilities of the Security Fund transferred to

the Protection and Compensation Fund in virtue of the Act shall, as

from the date of coming into force of these regulations, be kept

separate from other assets and liabilities of the Protection and

Compensation Fund and the administration of the assets and

l i a b i l i t i e s w h i c h a r e t o b e k e p t se p a r a t e i n v i r t u e o f t h o s e

regulations shall continue to be governed by regulation 10 of the

1986 Regulations until all obligations of the Protection and

Compensation Fund under the 1986 Regulations are discharged in

full.

(4) Any assets of the Protection and Compensation Fund which

are kept separate from the other assets of the Fund in virtue of this

regulation remaining in hand after the discharge of all obligations

under the 1986 Regulations shall be aggregated to the other assets

of the Fund and be assets of the Fund and continue to be used under

these regulations exclusively for the same purpose which they were

used under the 1986 Regulations.

(5) For the purpose of this regulation, the ''Security Fund''

means the fund established by article 26 of the Insurance Business

Act, 1981, repealed by the Act.