2020 Cyprus Country Report

We are
confident
that the
insurance
industry will
once again
prove its resilience in the
face of the strong headwinds
caused by the Covid-19 pandemic.
Although a contraction
is highly likely for 2020,
we expect this to be smaller
than that of the general
economy and succeeded by
a return to growth in 2021.
Andreas Stylianou
Chairman
Insurance Association
of Cyprus (IAC)
and business-friendly base to launch and manage
products, services and operations in international
markets. A number of foreign insurance
operators have been successfully operating in
Cyprus for many years, attracted by the island’s
EU member status, its straightforward legal
framework, ease of doing business and advantageous
tax regulation. EU passporting has attracted
major international industry players to
the country, and Cyprus is particularly well positioned
as a centre for companies doing business
in the EU and Middle East region.
The over 30 insurance companies operating
on the island account for more than 99% of the
annual gross premiums written in the domestic
market, with a handful of these companies
dominating the industry. A continuously evolving
market and increasingly specialised demand
have opened up new opportunities in creating
innovative services and products, and using the
country as a launchpad to expand business into
new regional markets.
CONSISTENT GROWTH
The insurance sector has seen steady growth in
the last three years bouncing back to pre-crisis
level revenues, which is evidence of a strong recovery
from the downturn of the 2013 financial
crisis. Insurance was a major financial sector in
Cyprus that managed to safeguard its employment
numbers and contribution to the labour
market. In 2019, the growth momentum continued,
with premiums on the life side increasing
0.7%, compared to 8.8% in 2018. On the
general side (non-life), 2019 saw a 6.1% increase
compared to 5.8% in 2018, according to figures
released by the Insurance Association of Cyprus
(IAC).
Today, the domestic insurance sector is considered
to be highly competitive due to the large
number of insurance suppliers on the island in
relation to the size of the population. There are
currently 32 insurance undertakings in Cyprus
that are licensed and supervised by the Insurance
Companies Control Service (ICCS), which is
part of the Ministry of Finance. In addition, eight
companies are operating under the freedom of
establishment (FOE) and well over 500 EU insurance
companies have exercised their freedom to
provide services (FOS) right by registering with
ICCS to carry out business in Cyprus. Leading
figures from the industry estimate that this type
of business will see further expansion in the
coming years.
SHARPENING THE COMPETITIVE EDGE
Continuously improving its offering and upgrading
its services, Cyprus is on par with international
industry standards. The insurance sector
in Cyprus is market driven and although perhaps
moving at a somewhat slower pace than the rest
of Europe due to its size, demand for more sophisticated
products is rising. The slower pace
also offers the benefit of learning from the experience
of bigger and faster moving markets
that lead the way in development. Furthermore,
numerous Cypriot insurance firms are partnerships
with international heavyweights, enabling
them to tap into the in-house expertise of these
powerhouses and use it to adapt products for the
Cypriot market.
For example, products such as director and
officer liability, are now offered and sought out
and new products, such as cyber and drone insurance,
are emerging as new tech rolls out into
the market. In addition, the wave of cutting-edge
Sector Profile
500+
European insurance/reinsurance
undertakings operating under the
freedom to provide services (FOS)
32
Insurance Companies
Country Report CYPRUS 2020 99