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Protection and Compensation Fund

A protection and compensation scheme is available under local insurance business legislation should the insurer become insolvent in respect of claims and obligations that arise from a policy of insurance covering protected commitments where Malta is the country of commitment subject to such limitations, restrictions and exclusions as may from time to time be prescribed.

In terms of the Insurance Business (Long Term Business Contract Statutory Notice) Regulations (S.L. 403.10), linked long term contracts of insurance are not protected commitments and thus such policyholders are not protected in the case of an insolvency of the undertaking.

The purposes of the Protection and Compensation Fund (established under the Protection and Compensation Fund Regulations, 2003 are only to:

  • pay for any claims against an insurer which have remained unpaid because the insurer became insolvent. These claims must be in respect of protected risks situated in Malta or protected commitments where Malta is the country of commitment; and
  • compensate victims of road traffic accidents in certain specified circumstances

You should therefore also consider carefully these limitations/exclusions prior to making any decision to invest.

More information on these compensation schemes may be obtained from the Malta Financial Services Authority's Compensation Schemes dedicated website.

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