INSURANCE BUSINESS (EXEMPTIONS) REGULATIONS

SUBSIDIARY LEGISLATION 403.22

INSURANCE BUSINESS (EXEMPTIONS)

REGULATIONS

1st January, 2016 *

LEGAL NOTICE 401 of 2015, as amended by Legal Notices 34 of 2017

and 313 of 2022.

(1) The title of these regulations is the Insurance Business

(Exemptions) Regulations.

(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.

Any reference in these regulations to the Act is a reference

to the Insurance Business Act, and the provisions of article 2 of the

Act shall also apply to these regulations.

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

Article 4 of the Solvency II Directive, an insurance undertaking

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 €5,400,000;

(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 €26,600,000;

(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 €26,600,000;

(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 €600,000 of its gross written premium

or exceeding €2,700,000 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

*see regulation 1(3) of these Regulations, as originally promulgated.

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

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

accordingly, a person carrying out the following operations shall be

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;

(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; or

(iv) export credit insurance operations, for the

account of or guaranteed by the Government of

Malta, or where the Government of Malta is the

insurer, falling within the scope of Article 5(4)

of the Solvency II Directive;

(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;

INSURANCE BUSINESS (EXEMPTIONS)

(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.