By Nikolai Debono

World War II brought the Maltese insurance industry to a screeching halt. By late 1941, private importation ceased and everything arrived on the island through escorted convoys. This meant that marine insurance − historically one of the biggest non-life markets for Maltese agencies − was taken over by companies in the UK with the War Risk Insurance Office.

This loss of business to local insurance agents came after a disappointing turn of events. In 1939, a new law was set to come into effect: the Motor Vehicles Insurance (Third-Party Risks) Ordinance, making the insurance of vehicles (for liabilities arising from accidents) compulsory. It was a much-anticipated legislation, which addressed the growing need for motor insurance as well as increasing business for local agents.

A ‘Times of Malta’ cartoon promoting third-party motor vehicle insurance in 1937, before it became compulsory.

Motor insurance itself pre-dates 1939. Atlas Insurance’s archive holds records of motor vehicles, car dealerships, garages and motorcycles owned by men and women being insured in the 1920s. In the 1930s, accidents and claims were not uncommon.

Motor vehicle accidents in Malta were not uncommon in the pre-war years, as reported by Times of Malta on October 27, 1938.

Moreover, certain principles were already adopted by local agents. For example, cars older than five years were not covered for damages without a significant increase in premiums, demonstrating a developed class of insurance. Just before the war, some 8,000 vehicles were licensed, with another 2,000 being services and government-owned vehicles.The 1939 ordinance was set to radically change motoring in Malta. Local agents even advertised its official introduction in early 1940. Although the law was published, it was never enforced.Instead, parliamentary discussions ensued on the formation of a government-owned insurance company to nationalise motor insurance. The bill was proposed by George Borg, as part of the wartime council of government. The primary motivation was to prevent what was seen as a new source of revenue from leaving Malta in such a time of need because local insurers were agents of foreign companies and would only receive a commission on profits.

“The 1939 ordinance was set to radically change motoring in Malta”

Local insurance agents (with the Accidents Office Association) had actively participated in the drafting of the ordinance for many months and received such suggestions with great offence.

“We, Sir, have already commercial monopolies, that is, the water and electricity undertaking and the telephone undertaking, the former being carried on as a paying concern. If, Sir, third-party insurance is to be a success − and I do not see why it should not if it is taken up as a government monopoly − naturally the money, instead of going to a company, whether it be a Maltese local company or a British company out of Malta, would go to the local exchequer, that is it will go indirectly to the pockets of the Maltese taxpayer. As such, in principle I do not see how anyone could be against a motion which is intended to establish third-party insurance as a government monopoly in Malta.”− P. Boffa, sitting no. 26, April 20, 1940.

In May 1940, local insurers protested. They argued that the government’s estimated revenue to be generated from the new ordinance (£18,000) was not based on any known statistics. In fact, local insurers had not even issued any policies yet, let alone prices and rates. More so, local agents argued that the Maltese government was not taking into account the agents’ expenses, including the employment of an actuary − a specialist who calculates the financial risks of insurance.

They also argued that a government-owned insurance office could not be sustainable and could not diversify risk across several classes of insurances. Even if this were achieved, no agency in Malta would find sufficient business by offering all classes. Lastly, insurance agencies could offer a much better service having several offices of experienced insurers.

All protests and correspondence proved futile as the use of private cars was forbidden in order to save fuel (unless impressed for the war effort with official permission) soon after the first bombs were dropped.

“In virtue of the powers conferred on the Governor by Regulation 44 (2) of the Malta Defence Regulations, 1939, His Excellency the Officer Administering the government has been pleased to make the following order: No privately-owned motor-car or hirer-driven motor car may be used on any road after midnight of the 13th July, 1940, unless a special permit has been issued by the Commissioner of Police” − Malta Government Gazette, July 12, 1940.

One of the first motor insurance advertisements on Times of Malta in August 1947, soon after the law became compulsory.

Discussion resumed in 1944, when it was estimated that 2,000 private vehicles and 3,000 government and service vehicles were in use. However, the worsened state of roads and the condition of vehicles were considered likely to increase the liability of accidents.

In the following years, private vehicles increased but the market was still very small compared to the years before the war. Between 1945 and 1946, a total of 3,026 vehicles were estimated to be eligible for insurance in Malta, 1,157 of which were private cars. For comparison, 439,398 motor vehicles were registered in Malta in March 2024, according to the National Statistics Office.

The 1939 Motor Vehicles Insurance (Third-Party Risks) Ordinance was eventually amended and enforced on August 1, 1947, without government monopolies.

In the end, it was considered more efficient to retain the transaction of insurance business through local agents’ offices; a government insurance company would inevitably be more involved in litigation of claims rather than the equitable compensation to maintain a clientele, as practised by commissioned agents in Malta.

Although some amendments have been made, this law is still extant and enforced to this day.

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Written by Nikolai Debono, who is a researcher with a background in history and anthropology. 

This article was originally featured on Times of Malta on the 21st of November 2024. 

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