
News & events
February 21, 2024
The 1st February 2024 marked the publication by the Malta Financial Services Authority (“MFSAs”) of its 9th volume from its series on ‘The Nature and Art of Financial Supervision’. This new volume focuses on the insurance sector, particularly on Malta-based (re)insurance undertakings and insurance intermediaries.
Through this publication, the regulator, inter alia, (1) identifies the off-site and on-site work which has been carried out by the Insurance and Pensions Supervisory team and the Conduct Supervision team in the insurance supervision space, (2) highlights areas where enhancements are being strongly encouraged to address common deficiencies and gaps which have been observed from MFSA’s supervisory work and (3) clarifies the Authority’s expectations to address the weaknesses identified.
The main common deficiencies which the Authority came across during its supervisory work include:
Governance
Common weaknesses/deficiencies
Composition and collective competencies of the Board
Board Committees reporting structures
Understanding of business model resilience to stress scenarios
Board meetings’ minutes
Discussion time on compliance matters, effectiveness of Board and Committees performance, system of governance reviews, effectiveness of risk management system and internal controls
Fit and proper assessments
Compliance
Common weaknesses/deficiencies
Knowledge of the applicable legal and regulatory framework
Resources and support of the Compliance function
Compliance plans and comprehensive and timely reporting of compliance matters
Disclosure requirements and complaints handling
Internal Audit
Common weaknesses/deficiencies
Comprehensive internal audit plans
Distribution Channels
Common weaknesses/deficiencies
Review and monitoring of distribution network
Internal controls, including manuals, documented procedures and reporting processes
Oversight being exercised by appointed individual within the regulated entity
Reserving and Claims Handling
Common weaknesses/deficiencies
Documentation of reserving process, assumptions and methodology
Audit checks and audit trails
Claims handling procedures, processing and oversight
Business Continuity
Common weaknesses/deficiencies
Documenting, testing, review and updating of contingency and business continuity plans
Exit strategies for outsourced critical or important functions or activities
Complaints Handling
Common weaknesses/deficiencies
Complaints register
Insurers’ monitoring of intermediaries compliance with complaints handling policy and procedures
Timely complaints handling
Complaints analysis
Disclosure Requirements by Tied Insurance Intermediaries
Common weaknesses/deficiencies
Awareness of IPIDs and KIDs content
Adequate and comprehensive knowledge of pre-contractual disclosure requirements
Demands and Needs
Common weaknesses/deficiencies
Understanding and implementation of the demands and needs assessment
Should you require any clarifications on the above, kindly contact Matthew Bianchi, Romina Bonnici, Philippa Taylor-East or Elaine Magri.