An analysis of the compliance function across the Maltese insurance industry

Abstract

A strong compliance function is an essential element contributing to the success of an entity as it forms a critical part of the system of governance of any organisation. It ensures that the company is in line with the applicable rules and regulations ranging from internal company policies to external applicable legislation.

This study aims to analyse the compliance function across the Maltese Insurance Industry. To do so, the author has sought to answer the below research questions: 1. How is the compliance governance framework structured within Maltese insurance entities? 2. How does the compliance function impact the Maltese Insurance Industry? 3. Can compliance IT systems be utilised by Insurance entities to assist and/or automate compliance processes?

The author has adopted a qualitative research approach by conducting fourteen (14) semi structured interviews with compliance officers working within the insurance industry in Malta and with an employee holding a management position at the Malta Financial Services Authority.

The main findings of this study indicate that the compliance function is generally kept as an in house and independent function. Compliance is seen as a tool used by insurance entities to provide guidance and advice to the operational department of an insurance entity i.e. the client facing staff. By doing so the compliance function can mitigate compliance risk and have in place high ethical principles while also establishing a strong compliance culture within an entity. Although having compliance systems in place would be beneficial for an insurance entity, participants have argued that a certain level of input from the compliance officer would always be required.

Therefore, this study positively contributes to the industry by providing guidance in the role the compliance function plays within an insurance entity and enhances the industry’s perspective on compliance.