An analysis of the opportunities and challenges for Maltese-licensed PCCs

Abstract

This study set to find the opportunities and challenges faced by Maltese-licenced PCCs, thereby providing professionals and academics with one source of information capturing the local market. The academic literature places significant emphasis on the necessity of PCCs, yet it neglects to delve into the practical opportunities and challenges that they encounter. The interrelation thereto also remains unexplored. Notably, it is also yet to acknowledge the smaller niche PCC structures which include insurance managers and brokers, thus leaving another gap within this specific area of research. To achieve the research objective, the author employed a qualitative methodology. Preliminary desk research was proactively undertaken to establish the aforementioned gap in the academic literature and understand the need thereto. Various M&As, SFCRs, and financial statements were consulted to gather the data necessary for the population demographics, which were then used to lay the context for the thematic analysis. The thematic analysis encapsulated primary data from 11 interviews and secondary data from the grey literature systematic review. It has been noted that while the existing body of literature provides a comprehensive overview of PCCs, it has not fully captured the unique dynamics of the local PCC market. This peculiarity exists because, with the exception of Malta, this structure's original introduction and expansion took place in offshore countries. The potential and problems faced by Maltese-licenced PCCs are very different from those faced by PCCs in offshore countries, because Malta is a key component of the single market and works under EU regulation and supervision. The author later learned that the opportunities and difficulties faced by PCCs licenced in Malta are mostly caused by elements including their creditworthiness, the regulator's appetite to present new market opportunities, and the country's reputation. The research found that despite the recent stagnancy emanating from increased regulatory burdens and reputational damage, the PCC structure will remain a success story for the local insurance industry. They have attracted significant foreign investment, reduced barriers to entry for small, niche, and cross-border insurance players, and were also instrumental in attracting quality talent to the local industry. The regulation, economic and technological advancements underway further imply that the local market has not reached the peak of its success and is set to continue growing.