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6 maltatoday | WEDNESDAY • 1 MAY 2024 NEWS How strong is the life insurance market in Malta? The market is growing slowly and the rate of penetration is much lower than in the other European countries. Unfortu- nately life insurance in Malta is still seen by many as an obligation when they need to get a bank loan and not as an important way to protect their future and the one of their families. Families in Malta don't have any problem to spend thousands of euro to insure their cars but they are not invest- ing the same amount of money to insure themselves. Are the incentives provided by the government on private pensions working? Yes, they are working very well. In 2023 the amount of the individual pension plans increased by 135% compared to 2022. It is a very attractive model. On each €3,000 invested in these plans there is a rebate from the government of €750 every year. This means that ,effectively, a return on the investment of 25% per year is guaranteed by the government. If also the tax credits were reinvested at a re- turn rate of 5%, after 30 years the €3,000 invested every year will have become 260,000 euro. A very efficient way to build your private pension. Does LifeStar offer these kind of pension products? Yes. In fact we are market leader in pri- vate pension, with a market share of about 40% (according to the data provided by the Insurance Association Malta). In 2023 and in the first quarter of 2024 we experienced a double digits growth in pension plans and investment policies. What other products does LifeStar offer? We offer the full range of life insurance products. From life, accident, disability or cancer to protect our clients and their families if anything goes wrong, to wealth saving and pension to protect their future financial well-being. Also as the exclusive agent of BUPA, we have been covering the health of our Maltese clients for the past 53 years. How important is health insurance for families? Health insurance is becoming a priority for every family in Europe. With the aging of the population and the increase of can- cer related diseases, the pressure on the public health systems is increasing in Mal- ta and in Europe. Additionally in Malta the recent growth of the population living on the island is further increasing the pressure on the public infrastructures. To invest in a private health insurance means primar- ily to get the right to choose. Choose the doctors, choose the hospitals, choose the countries where you want to be treated, choose when you want to be treated. How is technology changing the insurance industry? Technology is reshaping the whole in- dustry and Covid gave a big boost to this trend. Before the epidemic we relied heav- ily on paper and on physical interactions. During Covid we were forced to move everything online and paperless in a few weeks. Our investments in technology keep growing in every area of our business. How will artificial intelligence influence the industry? AI will change the insurance industry from its basis. So far all the insurance com- panies in the world have been determining the prices of the policies using historic statistical data. With AI and the new da- ta management tools companies will have access to real time data and they'll be able to price the policies using current infor- mations. The systems will also learn the behaviour of the clients and will be able to determine the risk and the consequent price for each client. Can you give us an example? Today if I am perfectly fit, exercise every day, don't drink, eat healthy and sleep 8 hours a day I pay the same premium than an individual of my same age weighting 120 kg, who sits all day in front of the tv, eats junk and drinks all night. In the near future AI will determine the risk level for each individual and the prices will reflect the higher or lower risks. This will also have a very beneficial impact on the soci- ety since it will promote and incentivise a healthy life style. What are the main challenges the industry is facing? The main challenges are regulations and scalability. Regulations in the EU are in- creasingly tight and cumbersome. There are always new rules, procedures and stand- ard to comply with. In 2023 we had to intro- duce two new standards for insurance com- panies which required to effectively replace most of our software. This was for us an enormous investment in terms of time and resources and we had to rely on third parties providers to get the work done. Also, since the rules are the same for every company, big or small, companies in smaller markets like ours are heavily penalised. This is why scalability and size are important. We have been working on some major plans to grow our business, which will be announced in the next few weeks. What is your influence on the local economy as an institutional investor? With almost 50% of our assets invested in the local market we are one of the larg- est local investor. I strongly believe that the money entrusted to us by our Maltese clients should be reinvested primarily in Malta. There are many investment op- portunities in the country and I wish that also the other local financial institutions would follow our example. In this regards I believe that there is a lot that the govern- ment could do to promote investments in Maltese companies. 'To invest in private health insurance means primarily to get the right to choose' Life insurance offers valuable financial protection in the event of death. But it may also be a means of saving. This combination makes life insurance unlike any other financial product. MaltaToday speaks to Prof Paolo Catalfamo, Chairman of LifeStar Holding plc., about the challenges players in the insurance industry are facing today and how technology - and AI - can inf luence the industry in the next few years.