27.02.2026
The landscape of Maltese insurance law is currently undergoing a significant transformation. As we move through 2026, the local industry is preparing for a dual shift. The first being the full integration of the Solvency II 2020 Review with the second being the upcoming implementation of the Insurance Recovery and Resolution Directive (IRRD). For local and international insurers operating from the Maltese shores, these updates represent more than just administrative changes, they are a fundamental evolution in how risk, proportionality, and resilience are managed within the European Single Market.
Implementation Timeline
Following the formal entry into force of the amending directives at a European level in early 2025, Member States have been granted a two-year transposition period. In Malta, the Malta Financial Services Authority (MFSA) is working toward a firm deadline: the new rules and requirements are set to become fully applicable from the 30th January 2027.
While this may seem as a distant date, the complexity of the changes means that the "dry run" for these frameworks is effectively happening now. During its second annual conference held at the Radisson Golden Sands in Mellieha on the 26th February, the MFSA rolled out its road map leading up to this deadline and soliciting the regulated entities to participate in the consultation process and various workshops to be organised allowing the Regulator to work alongside the industry to ensure a full and proper implementation of the new rules.
The Solvency II Review: Efficiency and Proportionality
The primary focus of the Solvency II updates is to refine the existing framework to better suit the diverse range of insurers in Malta. A cornerstone of this review is the formal introduction of the Small and Non-Complex Undertakings (SNCU) category. This is particularly relevant for the Maltese market, which hosts a variety of specialized captives and niche insurance players.
Under these revised rules, eligible firms will benefit from streamlined reporting requirements and simplified calculations for their Solvency Capital Requirement. The objective is to reduce the administrative burden on smaller entities without compromising the safety of policyholders. Furthermore, the updates provide more flexible deadlines for certain annual reporting submissions, allowing boards more time to ensure the accuracy and quality of their disclosures.
The IRRD: Funding the New Pillar of Resilience
While Solvency II focuses on ongoing stability, the IRRD introduces a framework for the unlikely event of severe financial distress. A key development in this area is the MFSA’s proposal for a dedicated resolution fund. Qualifying insurers will be expected to make a contribution into this fund where the amount of the contribution shall be computed in line with specific rules to be published for this purpose.
This contribution shall ensure that the financial burden of managing an insurer in distress is borne by the industry itself rather than the taxpayer. The fund will finance the resolution tools to be developed by the Regulator such as the ability to transfer critical business functions to a bridge institution thereby ensuring that if an insurer fails, it does so without destabilizing the wider Maltese financial system.
IRRD vs. The Protection and Compensation Fund
It is vital to distinguish between these two mechanisms. The IRRD shall not be a replacement of the Protection and Compensation Fund already existing in terms of the Maltese Insurance Business Act but will serve as a complement thereto.
The IRRD shall serve as a preventive and interventional toolkit managed by the Regulator. Its goal is management and continuity, aimed at keeping the essential parts of an insurance business running before it collapses. In contrast, the Protection and Compensation Fund (PCF) remains a reactive safety net. The PCF only steps in after a total insolvency to pay out claims to individual policyholders.
How Dingli & Dingli Law Firm Can Assist
At Dingli & Dingli Law Firm, we believe that staying ahead of these regulatory waves is essential for the continued success of any insurance undertaking.
Our team is well-versed in the nuances of the Maltese regulatory environment and the specific expectations of the MFSA. We work closely with our clients to interpret these directives, ensuring that compliance is a strategic advantage.
Whether you are navigating the eligibility criteria for SNCU status, calculating your upcoming IRRD fund contributions, or drafting your first pre-emptive recovery plan, we can provide you with the technical expertise and practical guidance needed to meet the January 2027 deadline with confidence.
For more information, feel free to reach out to us on info@dingli.com.mt.