2020 Cyprus Country Report

The insurance
industry, which is
one of the largest
institutional
investors in Cyprus
managing assets
well over €2.5 billion,
has successfully
tackled challenges
and expanded
its services and
product offering,
while adapting to
a new reality of
digitalisation and
the ever-increasing
burden of regulation.
6.1%
2019 growth in
non-life premiums
tion of the new National Health System (NHS).
The industry supported the introduction of the
NHS, but advocated for an NHS that would also
involve private insurers. However, the industry’s
position was not accepted, and the legal framework
voted through by Parliament is based on a
single-payer system that excludes private insurers.
The implementation presents challenges to
the existing private health insurance business and
especially group policies, which are an estimated
46% of total health business. Some companies
are cancelling or downsizing group health insurance
policies for their employees in a bid to avoid
paying for two covers, the obligatory employer
NHS contribution and private health insurance
premiums. This has essentially been a cost-cutting
exercise for companies, however, on the flip
side the number of new private health insurance
policies has been growing over the last year.
Cyprus’ fledgling oil and gas sector, and in
particular its formidable shipping industry and
developing ship financing business could also
bring more marine insurance opportunities. Hull
and cargo insurance is still not a very large part of
insurance activity in Cyprus, but is a specialised
area that has strong potential to see growth and
further development in the future. Following the
protracted uncertainty caused by Brexit, many
UK companies looked abroad to set up subsidiaries
or fully fledged offices to secure their future
business – and for many, Cyprus proved an advantageous
location. A prime example of this was
the recent arrival of a new P&I Club member,
Steamship Mutual Underwriting Association
(Europe) Limited, which has decided to underwrite
all of its European business through its
Cypriot entity.
Another development that will facilitate more
opportunities, is the announcement from the
Cyprus Ministry of Finance to reform the pension
framework – a positive and welcome move. The
reform includes a plan to merge the two separate
authorities supervising insurance undertakings
and occupational pension funds under a single
independent supervisory authority, which will
be based on the model of the Cyprus Securities
and Exchange Commission (CySEC). This will
facilitate better supervision within these sectors
and help modernise and reboot the pension fund
market in Cyprus. Although a legislative proposal
has already been submitted to Parliament, negotiations
are expected to be lengthy and the result
is uncertain.
LOCATION OF CHOICE
Equally attractive to both EU and non-EU based
insurance companies and managers, Cyprus’
insurance sector is an interesting area of the island’s
diversified financial services industry. The
jurisdiction offers multiple fiscal benefits for international
business, such as easy market access
and the services of a vast pool of professionals
in the insurance and financial services industry.
Another attractive aspect is Cyprus’ tax system
and its network of double tax agreements, rendering
it a serious contender as a location of choice
for regional headquarters for cross-border insurance
operations and as a launch pad into the EU
and surrounding markets of the Mediterranean
region. n
Discover more at www.cyprusprofile.com
Sector Profile
Country Report CYPRUS 2020 101