The development of the life insurance market in Malta : a comparison with other EU countries

Abstract

Life insurance, in most parts of the world is a highly developed market and a competitive class of business, involving a high volume of transactions and premiums of world currencies. The constant increase in demand and competition within the life insurance market, all around the world, has put pressure on insurance companies to design life products to satisfy the changing needs of the people. Different countries experience different expansions within the life insurance market and therefore, different countries are compared. There are various methods with which the life insurance markets in different countries may be compared but the main two methods used are the life insurance density and the life insurance penetration rate, which include the size of the population and the Gross Domestic Product, respectively. When compare with other European and EU countries, Malta is still lagging behind in certain aspects. This is represented in various statistics showing the Maltese life insurance market statistics as being lower than the EU averages. Malta falls behind the EU average in both life insurance density and penetration rate. In light of the foregoing, this study enabled a better understanding of the current situation of the Maltese life insurance market as compared to other European countries. Consequently, the findings shed light on the various opinions of different key players, namely, life insurance companies, life insurance intermediaries and the Malta Financial Services Authority, within the local life insurance market and what should be done, if Malta had to converge with the EU average at the very least. Using available data as well as one-to-one interviews, different aspects of the life insurance market in Malta were tackled. The main areas tackled were: - Roles of the different key players - Comparison with other European and EU countries - Areas likely to grow in the local life insurance market - Obstacles being encountered, including the concept of passporting - Convergence of the local life insurance density and penetration rate with the EU average. The one-to-one interviews sought to get a better understanding of the current situation and methods in which Malta could continue to expand its life insurance market. Various interesting results were achieved through the interviews including: - The introduction of the pension business including fiscal and tax framework; - Educational Programmes to change the current mentality; and - Other various recommendations. The recommendations that follow this study will continue to help the expansion in the local life insurance market and the convergence with the EU averages. For this to be achieved, the different stakeholders and key players in the market should be synchronised with each other so as to achieve the most of the expansion. This will result into better statistics for the life insurance market and affects positively the local economy in general.