Building a resilient insurance market

Over the past two decades, Malta’s insurance sector has experienced consistent growth, from just five insurance undertakings to over 70 today. The industry employs 1,400 people, generating a remarkable €8.2 billion in gross written premiums, with profits before tax reaching €700 million. This growth was achieved within the framework of EU regulation, including Solvency II, under the supervision of the Malta Financial Services Authority (MFSA).

The Corporate Times sat down with Petra Hielkema, Chair of the European Insurance and Occupational Pensions Authority (EIOPA), in Malta for a high-profile MFSA conference, to discuss the key challenges facing the insurance sector in Malta and beyond, from climate change to consumer protection and regulatory oversight.

As Europe grapples with geopolitical shifts, conflicts, political uncertainty and growing pressures of an ageing population, discussions on the future of the insurance sector take on even greater significance.

“Resilience and competitiveness can underpin the robustness of Europe’s insurance sector and in both areas, EIOPA is committed to supporting industry in being both positioned for growth and ready to overcome challenges,” argues Hielkema.

Citing Solvency II as a cornerstone of financial stability, she highlights how the framework has helped insurers withstand major disruptions namely the financial fallout of the COVID-19 pandemic and the economic impact of Russia’s invasion of Ukraine.

One key area of focus in the recent Solvency II review has been proportionality and Hielkema acknowledges that reporting requirements, while essential for oversight, can be burdensome.

“In strengthening the proportionality framework, EIOPA has sought to avoid placing unnecessary burdens on insurers – especially smaller ones with straightforward risk profiles. A concrete example is the reduction in reporting requirements by around 1,000 data points for small and medium-sized enterprises”.

However, she cautions against an excessive reduction in data collection, noting that financial stability, consumer protection, and regulatory convergence must remain priorities.

“Before we think about reducing the data requirements in reporting, we have to be sure that losing that data will not diminish supervisors’ ability to assess risk or measure progress on sustainability and closing protection gaps.”

Malta’s insurance market: A success story with further potential

Malta’s insurance industry flourished under the EU’s passporting regime with Malta-based insurers able to operate across the bloc but this growth requires strong regulatory oversight and to ensure that cross-border business benefits both insurers and consumers.

Today, around 11% of insurance premiums written in Europe come from cross-border business.

Education is also key in safeguarding trust in insurance

“The Single Market and Solvency II have been powerful enablers of cross-border insurance, however, consumer protection in cross-border business remains a challenge.”

“Consumers should receive the same level of protection, regardless of where they live or purchase their insurance. Unfortunately, recent cases have shown that this is not always the reality which is why EIOPA is strengthening supervisory cooperation to prevent cases where policyholders of failed insurers are left worse off than those with domestic policies.”

Insurance’s role in protecting against climate change 

With climate change leading to more frequent and severe natural catastrophes, the insurance industry needs to balance financial stability and affordability while rising premiums are making insurance less accessible.

“It is important that insurers price for the risk they underwrite. That price is a reflection of the risk. As climate risks intensify, we are seeing higher losses translate into rising premiums, which in turn widens the protection gap,” Hielkema says.

To counter this trend, EIOPA has proposed public-private partnerships, including an EU-wide reinsurance scheme to spread risk more effectively.

“This proposal could prevent excessive price increases and ensure that insurance remains accessible. Moreover, we have called for enhanced risk awareness tools to empower business and consumers with the knowledge they need to make informed decisions about their coverage”.

“By working together, we can balance financial stability with affordability, ensuring that insurance remains a reliable safeguard against climate-related disasters.”

Education is also key in safeguarding trust in insurance. A recent Eurobarometer report on consumer trends in insurance and pension services, which included data from Malta, shows low levels of trust in the products offered.

“Pan-European consumer surveys show that only 45% of EU consumers feel their Insurance-Based Investment Products (IBIPs) provide value for money. This is why EIOPA is prioritising simplicity, transparency, and the use of behavioural insights to improve product design, urging for products to be simple, transparent, and easy to understand.”

In 2025, EIOPA plans to expand its work on mystery shopping and benchmarking to ensure fairer outcomes for consumers. Digitalisation is another key area of focus, aligning financial innovation with consumer protection.

“As the world embraces Artificial Intelligence and digitalisation, a priority will be to make sure that innovation is aligned with the best interest of citizens, with a focus on how to foster financial and digital literacy”.

The future of pensions and Malta’s recent reforms

One of the most pressing concerns for Europe is the pension gap, with over 18.5 million seniors at risk of poverty or social exclusion.

Hielkema welcomed Malta’s initiative to address this issue with its voluntary occupational pension schemes but stressed that a sustainable pension system should effectively combine state, occupational, and personal pensions.

“With the shift from defined benefit to defined contribution schemes, individuals are increasingly responsible for managing their retirement savings, making financial literacy and access to pension products more important than ever”.

EIOPA supports measures such as automatic enrolment in workplace pensions to boost participation.

“Expanding access and participation in these schemes is crucial to ensuring that people can build a secure retirement. Malta’s pension reform is a step in the right direction but greater efforts are needed to drive take-up of voluntary pension schemes.”

As Malta’s insurance market continues to evolve, EIOPA and the MFSA remain committed to supporting industry resilience while ensuring consumer protection.

“By working together – regulators, industry, and consumers – we can build a competitive, resilient, and consumer-friendly insurance market that delivers real value to people across Europe, including Malta.”