Tied insurance intermediaries (TIIs) are considered to be a significant distribution channel in Malta and accordingly, it is very important that they act in line with their regulatory requirements to ensure the best interest of their customers. Given this, and as part of its stakeholder outreach, the MFSA organised a webinar for tied insurance intermediaries on Friday 5 February 2021. The aim of this webinar was to highlight the Authority’s expectations with respect to the adherence of tied insurance intermediaries to their regulatory requirements. Although such intermediaries distribute insurance products exclusively on behalf of their principal, they are still licensed in terms of the Insurance Distribution Act in their name. Hence, they are required to personally abide by regulatory requirements relating to conduct of business, prudential requirements and Anti Money Laundering.
During this webinar the requirements to the sales process including, demands and needs testing and suitability and appropriateness testing in the case of sales of insurance-based investment products were discussed. Another related subject which was addressed is the relevant requirements relating to pre-contractual disclosure, product distribution arrangements, and record keeping. Furthermore, a brief overview of the salient features of a Key Information Document that should be provided to policyholders considering an insurance-based investment product was provided.
From a prudential perspective, the webinar addressed the requirements relating to the holding of clients’ money in a fiduciary capacity. In particular, the webinar highlighted the way tied insurance intermediaries are expected to operate the bank accounts linked to their tied insurance intermediary activities as well as the attendant record-keeping requirements.
The webinar also tackled the issue of why AML/CFT oversight is important, and how and which TIIs are obliged to follow the Prevention of Money Laundering obligations. This part of the webinar, which was addressed by a representative of The Financial Intelligence Analysis Unit took into account the main risks that the insurance sector faces as concluded by the supranational and national risk assessments. Furthermore, the risk-based approach, including the business risk assessment and customer risk assessment, were discussed alongside the importance of internal and external reporting lines, ongoing monitoring, and remaining abreast of AML/CFT matters through financial crime related training.
Participation in this webinar contributed to three hours to the annual Continuous Professional Development requirements applicable to Tied Insurance Intermediaries as set by Chapter 7 of the Insurance Distribution Rules.