Insights

On the 16^th April 2025, the Malta Financial Services Authority (MFSA) has issued a Circular introducing key regulatory changes affecting bancassurance in response to a 2022 European Court of Justice (ECJ) ruling.

In the past, legal entities like banks and employers that provide group insurance (also known as “master policies”) —where these entities act as policyholders and beneficiaries and have the ability to add additional beneficiaries—were not considered to be engaged in insurance distribution. As a result, they were not required to be licensed as insurance intermediaries.  However, the ECJ’s decision in Case C-633/20 redefined the scope of “insurance intermediary” to include entities offering customers voluntary membership in group insurance policies in return for remuneration which entitles such customers to insurance benefits.

In light of this, following discussions with stakeholders, the MFSA decided to revise its Bancassurance Policy to allow licensed credit and financial institutions to extend their enrolment as tied insurance intermediaries to include Home Contents, Travel and Private Individual Health insurance.  As a result of this shift, credit and financial institutions can obtain enrolment to carry on tied insurance intermediaries activities in classes of long-term insurance business and in the following classes of general insurance business:

• Classes 1, 2 and 16 – restricted to payment protection contracts of insurance issued in relation to loan repayments and individual health policies;
• Classes 8, 9, 13 – related to home policies covering all aspects of residential property ownership;
• Classes 1, 2, 7, 8, 9, 13, 18 – restricted all types of single or annual travel policies and
• Classes 14 – restricted to export credit contracts of insurance.

Additionally, proposed amendments to Chapters 1 and 2 of the Insurance Distribution Rules will clarify that any entity offering membership in a group insurance policy on a voluntary basis, where insurance benefits are provided and the activity is remunerated, will be required to be enrolled accordingly.  Importantly, the MFSA clarified that not all group policyholders will be caught by these changes and that the changes to Chapter 2 of the Insurance Distribution Rules are without prejudice to the Insurance Distribution (Exemption) Regulations.

Beginning 5^th May 2025, the MFSA will accept applications for enrolment or extension thereof in the Tied Insurance Intermediaries List for credit and financial institutions to act as tied insurance intermediaries in respect of the contracts of insurance falling within the general insurance business classes identified above.

Additionally, entities operating in Malta should review their group insurance policy arrangements and prepare for potential licensing obligations in light of the above key changes to ensure that they are aligned with the revised requirements by 20th of October 2025.