Ganado Advocates' Insurance Regulatory Team Compliance Services
As directors of insurance undertakings and insurance intermediaries are undoubtedly aware, licensed entities are bound by a great number of regulatory obligations. Our Insurance Regulatory Team at Ganado Advocates offers a range of compliance services including, ongoing regulatory assistance and advice on an "as needed" basis throughout the course of insurance application processes such as licence applications, change in control, passporting, portfolio transfers, compliance support services to the Compliance function of an insurance undertaking or insurance intermediary, gap analyses on specific areas such as the POG process, sanction screening, complaints handling or other IDD requirements, amongst many others.
EIOPA publishes report on European insurers' exposure to physical climate change risks
The escalating frequency and severity of extreme weather-related events coupled with the drive towards a more ambitious agenda for sustainable finance has resulted in the European Insurance and Occupational Pensions Authority (''EIOPA'') publishing a report on European insurers' exposure to physical climate change risk (the ''Report''). The Report focuses on assessing the materiality of the insurance sector exposure to physical climate change risk under a financial stability perspective. The Report's findings are the result of an exercise which included a large data collection from industries focused on property, content and business interruption insurance against windstorm, wildfire, river flood and coastal flood risks. These risks have been identified as the most relevant for the European property insurance business.
The Report highlights that a lot of work still needs to be done, with more than 50% of participants of the Report who have not yet undertaken any climate change analyses.
The Report may be accessed here.
MFSA publishes Guidance Note on Administrative Penalty Calculations
The Malta Financial Services Authority (the ''MFSA'') has published a guidance note aimed at providing information to licence holders or persons carrying out unauthorised licensable activities on the principles and processes it would use when calculating an administrative penalty for breaches of regulatory requirements (the ''Guidance Note'').
The Guidance Note states that the MFSA's penalty-setting methodology is based on the principle of proportionality, discipline and deterrence and acknowledges that while the MFSA has a degree of discretion in determining the amount of an administrative penalty, it is guided by the principle of proportionality and ensures that an administrative penalty does not exceed the maximum amounts as stipulated at law.
The Guidance Note can be accessed here.
ESAs publish joint supervisory statement on key information document (KID) for packaged retail and insurance-based investment products (PRIIPs)
The European Banking Authority, European Insurance and Occupational Pensions Authority and the European Securities Markets Authority (the ''ESAs'') have issued a joint statement dealing with the 'What is this product?' section of the key information document for packaging retail and insurance-based investment products (the ''Joint Statement'').
The ESAs highlighted several poor practices that they have identified in their investigations such as the use of language, which is too technical and difficult to understand, imprecise description of early termination features and limited information about the specific nature of the underlying assets to which investors are exposed.
The Joint Statement further notes the ESAs expectations on this matter to ensure that retail investors receive information in an adequate, clear and accessible manner.
The Joint Statement can be accessed here.
Provisional agreement reached on DORA
On 10 May 2022, a provisional political agreement was agreed on the Digital Operational Resilience Act (''DORA''). DORA sets out uniform requirements for the security of network and information systems which, once in force shall inter alia apply to banks, insurance companies and investment firms as well as third party ICT providers.
DORA forms part of a larger digital finance package aimed at fostering technological development and ensuring financial stability and consumer protection.
Although not yet in force, license holders would be wise to start familiarising themselves with the requirements that DORA will introduce so as to minimize disruption to their business.
More information can be accessed here.
MFSA issues Guidance to Insurance Distributors
Pursuant to the mandatory assessment of a client's demands and needs prior to the offering of an insurance contract, the Malta Financial Services Authority (''MFSA'') has published a comprehensive document aimed at assisting insurance distributors in this assessment (the ''Guidelines'').
The Guidelines serve to both provide a clear and comprehensive outline to insurance distributors of their obligations, whilst also highlighting the MFSA's expectations in this regard.
The full text of the Guidelines can be accessed here.
EIOPA issues its advice on Retail Investor Protection
Following the European Commission's call for advice, the European Insurance and Occupational Pensions Authority (''EIOPA'') has published its Final Report on retail investor protection in relation to the sale of Insurance-Based Investment Products (''IBIPs'') (the ''Report'').
EIOPA's main findings in the areas which the European Commission asked EIOPA to address include the following:
- enhancing consumer engagement with disclosures, including digital disclosures;
- assessing the risks and opportunities presented by new digital tools and channels;
- tackling damaging conflicts of interest in the sales process;
- promoting an affordable and efficient sales process; and
- assessing the impact of complexity in the retail investment product market.
The Report can be accessed here.
EIOPA Publishes its Feedback on the Discussion Paper on Blockchain and Smart Contracts in insurance
Following the public consultation that the European Insurance and Occupational Pensions Authority (''EIOPA'') had launched on the 29 April 2021 aimed at gathering feedback from stakeholders on the applicability of blockchain within the insurance sector (the ''Public Consultation''), EIOPA has published its feedback statement setting out a high-level summary of the responses received from stakeholders, together with EIOPA's reactions on the same.
EIOPA notes that stakeholders largely agree that there is a lot of potential for the application of blockchain and smart contracts within the insurance sector in speeding up transactions and claims handling, lowering operational costs and improving traceability.
However, EIOPA notes that stakeholders also acknowledge the potential risks in cyber and operational IT areas including encryption issues as well as risks arising from incorrect coding. Sustainability issues where also highlighted given the high energy consumption of some blockchain applications. EIOPA has indicated that it will continue monitoring blockchain and smart contract use cases in insurance, barriers and related risks and benefits, including in its InsurTech Task Force, and will also continue to assess blockchain use as necessary.
The Feedback Statement can be accessed here.
Insights
Innovation in Malta
This article provides an overview of the innovation and technological developments that are currently evolving within the insurance sector in Malta and which will remain at the forefront for years to come.
ECHR rules that mandatory basic health insurance is compatible with the European Convention on Human Rights
On 17 May 2022, the European Court of Human Rights ruled that the obligation to purchase mandatory basic health insurance and the enforcement of that obligation through administrative penalties, is compatible with the Convention for the Protection of Human Rights and Fundamental Freedoms.
Podcasts: Ganado Meets Finance
Ganado Meets Joseph Gavin
To start the season, Ganado Advocates' Managing Partner, André Zerafa, meets with CEO of the Malta Financial Services Authority, Joseph Gavin, to discuss regulation, supervision and the future for the financial services industry.
Ganado Meets Joseph Portelli
In this second episode, Ganado Advocates' Capital Market's Partner, Nicholas Curmi, meets with the Executive Chairman of the Malta Stock Exchange plc, Joseph Portelli, to discuss what the Malta Stock Exchange has managed to accomplish since 2015 and the vision and future prospects for the Exchange for the years to come..
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