An assessment of the implementation by Maltese insurance undertakings of the compliance function in terms of solvency II : a comparative study

Abstract

This study focuses on one of the main key functions introduced within the Solvency II Directive, the Compliance function. This Directive specifies that such key function is to be properly established and provides requirements on how it should be effectively implemented. The main objective of this study is to assess the implementation of the Compliance function by Maltese Insurance Undertakings writing local risks. As such, the study will provide an overview of the major milestones achieved leading up to the coming into force of the SII Directive together with providing comprehensive information on the requirements relating to the Compliance function emanating from the Solvency II Regulatory framework. Moreover, this dissertation will also provide detail on how such requirements were transposed into the Maltese regulatory framework, with information provided on the requirements emanating therefrom. As noted in the study, the requirements relating to the Compliance function are quite broad in scope and thus, the study will provide an analysis on how the requirements relating to the Compliance function under Solvency II have been effectively implemented within Maltese Insurance Undertakings. It will also provide comparison on the different approaches undertaken by the Compliance officers of the respective Undertakings. This study will also provide a number of recommendations to the Maltese Regulatory Authority on different issues identified through the analysis conducted as mentioned above. Furthermore, an overview of the regulatory framework of three European Union Member States, namely Italy, Latvia and Austria, will be made available explaining how these Member States transposed the requirements of the Compliance function within their regulatory framework. This study will also provide a comparison between these member states in order to determine the differences between the requirements.