The impact of ORSA on Maltese insurance companies : an analysis

Abstract

Purpose: This study aims to assess the manner in which insurance companies in Malta have applied the requirements of ORSA. It seeks to evaluate the outcomes of the ORSA process pursued by insurance companies. Moreover, it shall include the regulators perspective on the ORSA requirement. Lastly, the study aims to analyse the benefits and challenges of performing the ORSA. Design: The research objectives were reached by conducting 15 semi-structured interviews: with 8 local insurance companies, 4 insurance management companies (that are foreign owned but set up in Malta), 2 MFSA representatives from the IPSU and an expert from the industry. Findings: The study found that the level of preparedness varied among insurance companies and managed companies. In the first years of implementation, they had deficiencies in their ORSA. Findings show that the RMF takes the lead in the ORSA preparation but by time Board of Directors’ involvement in the process has increased. The ORSA results are used to enhance business decisions. The ORSA requirement has improved the company’s risk and capital management. It was observed that the principle of proportionality is difficult to apply in the ORSA process. Findings suggest that although insurers still face several challenges during the ORSA process, it is still beneficial to the company. Conclusions: This study concludes that the ORSA is well embedded within the insurance companies and managed companies. Risk and capital management is crucial for ORSA. There needs to be more guidance on the proportionality principle. Lastly, challenges found during the preparatory phase are still existent but the ORSA benefits outweigh its’ challenges. Value: This study shows how the ORSA requirement has affected Maltese insurance companies and managed companies. Furthermore, it highlights areas of improvement to the MFSA and the general insurance market.