Policyholder protection in the event of cessation of insurance business and insurance intermediaries activities

Abstract

Consumer protection has become an integral part of the complex legal framework in which financial services providers operate. The scope of this thesis is to contribute towards the understanding of the current position of Maltese law regarding the protection afforded to policyholders and interested persons, in the event of cessation of business by an insurance undertaking or an insurance intermediary, whether voluntary or following regulatory intervention. Consequently, the study will deal w addressing two methods of cessation: a voluntary cessation of business by insurance companies and insurance intermediaries, as well as, cessation of operations by these market players, as a consequence of regulatory action imposed by the competent authority. It is of utmost importance that policyholders be protected at the time that an insurance undertaking commences winding-up proceedings. Therefore, this study will examine the relevant provisions of Maltese law dealing with the winding-up of insurance undertakings. Prudential regulation cannot exclude the possibility of an insurance company becoming insolvent. For this reason the study concludes with a discussion on insurance guarantee schemes as a way of compensating policyholders and claimants for their losses, as well as, developments in this sector in the European arena. Where appropriate, an effort has been made to discuss Maltese insurance law in the context of European Community law which has inevitably determined much of its evolution and where expedient highlight certain issues by way of comparison with the current position in the United Kingdom.