Issue link: https://maltatoday.uberflip.com/i/1515592
8.2.2024 2 NEWS 8.2.2024 Malta Development Bank seeking to upgrade its InvestEU status MFSA urges insurance companies to continue enhancing board competencies BOARD of Directors within insurance companies need to enhance further their current composition and collec- tive competencies in order to imple- ment their system of governance more effectively. ey also need to improve their understanding of the resilience of their business model to stress scenarios. ese findings were reported in the latest volume of the Nature and Art of Supervision series which the MFSA publishes in order to communicate its supervisory approach amongst li- censed entities, and outcome. is lat- est volume focuses on the Authority's oversight of insurance and reinsurance undertakings, and insurance intermedi- aries whose head office is in Malta, out- lining the main focus areas of supervi- sion, which it carries out through both on-site visits and desk-based reviews. In this publication the MFSA is also high- lighting common recurring weakness- es and shortcomings which have been identified by the Authority during the course of its interactions with insurance providers. A number of insurance entities have also been found to hold inadequate compliance plans and reporting pro- cesses, be it for external reports to the MFSA, as well as internally to the Board. e MFSA expects that during board meetings held by these entities, more time is dedicated towards regula- tory compliance matters, and assessing the effectiveness of their governance, risk management system and internal controls. More proper documentation on these controls, especially for claims handling and governance of data is also expected. On business continuity, the MFSA reports that some of the contingency plans inspected are neither being regu- larly tested nor reviewed by insurance undertakings, and do not include exit strategies for outsourced critical activ- ities. When it comes to the demands and needs test that they are obliged to carry out with clients, it was found that as- sessments conducted are weak. Moreover, Tied Insurance Interme- diaries were not sufficiently knowl- edgeable about certain pre-contractual disclosures which they are bound to provide to clients, including those relat- ed to the procedure that one should fol- low in case of complaints, and the role of the Arbiter for Financial Services. Additionally, the frameworks that some insurance companies have in place to handle complaints are also lacking. e publication also provides an over- view of the regulatory changes that the MFSA implemented in the past year, as well as future developments in the reg- ulatory framework, such as the transpo- sition of the Motor Insurance Directive (''Directive 2009/103/EC'') which en- sures that injured parties are protect- ed through effective arrangements for compensation and improves the rights of policyholders particularly when an insurer winds up due to insolvency. MFSA Head of Insurance and Pen- sions Ray Schembri commented: "With this publication, we look more closely at the supervisory priorities which the MFSA has set for Malta's in- surance sector, and how we addressed them in our supervisory engagement with practitioners. By communicat- ing the findings of our inspections, our intention is to clearly set out the Authority's expectations for insur- ance undertakings and intermediar- ies, which they are required to meet at all times. The various outreach initiatives listed in the document are also testament to our commitment to engage regularly with and guide insurance providers on how they can achieve regulatory compliance and as a result, strengthen their organisa- tional robustness while ensuring they act honestly, fairly and in the best in- terest of their clients." e Nature and Art of Supervision Volume IX - Insurance is available on the MFSA website. THE upgrading of the Malta Development Bank's In- vestEU status to that of an Implementing Partner was discussed during a meeting at the Malta Development Bank. MDB Chairman Leo Brincat and its officials host- ed at their Floriana offices Dr George M Hyzler, the Maltese Member of the European Court of Auditors and his Cabinet. Mr Brincat explained that this can materialise once the Bank completes successfully the Pillar Assessment, an extensive European Commission audit that should be concluded imminently. During the same meeting Mr Brincat stressed the Bank's commitment to adhere to best European practic- es, as commended by the National Audit Office in their assessment of the Bank's Covid-19 Guarantee Scheme. He stated further that 'e Bank wanted to make best use of EU funding opportunities to effectively position itself as businesses' gateway to finance.' e MDB made it clear that while it fully understood that it was ECA's task to audit and monitor the imple- mentation of the EU's €800bn Recovery Fund, on its part the Bank considered it part of its mission to serve as an important vehicle for Malta's socio-economic and environmental transformation towards the Green and Digital paths set out in the same Recovery Fund. While the ECA Work Plan 2024 includes focus on State Aid applications in times of crisis, particularly both dur- ing the Covid-19 pandemic and the war in Ukraine, the MDB explained how it had issued a number of success- ful financial instruments linked to both crises.