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June 17, 2025
The Malta Financial Services Authority (MFSA) has reaffirmed its commitment to robust supervision and regulatory innovation in the insurance sector, as detailed in its 2024 Annual Report. The Authority’s efforts throughout the year focused on enhancing prudential oversight, consumer protection, and regulatory alignment with evolving European standards.
A key area of focus was the prudential supervision of insurance and reinsurance undertakings, intermediaries, and retirement schemes. The MFSA conducted targeted inspections, particularly of tied insurance intermediaries, to assess the handling of funds held in fiduciary capacity and compliance with claims reserving processes. These inspections ensured alignment with the Motor Insurance Directive and broader European regulatory standards.
The Authority also intensified its scrutiny of newly licensed insurance entities, conducting compliance inspections during their first year of operation to verify adherence to approved business plans and regulatory obligations. Given the cross-border nature of many firms, the MFSA collaborated closely with other national supervisory authorities, including those in the UK, to assess governance arrangements in third-country operations—an increasingly important focus in the post-Brexit regulatory landscape.
From a conduct perspective, the MFSA addressed several consumer-centric issues. Reviews of selling practices examined cold calling techniques, AML procedures, and value-for-money assessments, particularly in the context of online sales and sustainability disclosures. The Authority also launched a two-phase review of credit protection insurance (CPI), with the first phase focusing on policy wording and commissions, and the second phase—set for 2025—targeting distribution practices.
In terms of regulatory developments, 2024 saw significant legislative and rulebook updates. Amendments to the Insurance Business Act introduced new requirements for motor vehicle liability insurers to contribute to the Protection and Compensation Fund. The MFSA also reissued the Insurance Business (Protection and Compensation Fund) Regulations to transpose key provisions of the Motor Insurance Directive (Directive 2021/2118), ensuring enhanced consumer protection in the event of insurer insolvency.
Further reforms included the introduction of Chapter 17 of the Insurance Rules, which clarified procedures for transferring and winding up insurance cells. Updates to the Insurance Distribution Rules and Pension Rules were also implemented to reflect EU directives and feedback from market participants.
The MFSA continued to integrate environmental, social, and governance (ESG) considerations into its supervisory framework. In 2024, the Authority launched a Sustainable Finance Programme through its Financial Supervisors Academy, equipping staff with the tools to assess climate-related risks and combat greenwashing. The MFSA also participated in EU-wide initiatives such as the Technical Support Instrument (TSI) and the Network for Greening the Financial System (NGFS), reinforcing its role in promoting sustainable finance.
Overall, the MFSA’s initiatives in 2024 underscore its proactive approach to regulation, responsiveness to market developments, and commitment to safeguarding the integrity and resilience of Malta’s insurance sector.
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