Regulator The Superintendent of Insurance is the competent authority regulating the insurance sector in Cyprus.
Overview
The Cyprus insurance market used to be a closed market served by a limited number of domestic companies, but it has expanded significantly since Cyprus joined the European Union in 2004. Today the Cyprus insurance sector is highly competitive and the implementation of EU directives has made the regulation of the sector more sophisticated than ever. While this has increased costs in the short term in some areas, policy holders enjoy far greater peace of mind.
Cyprus has become an ideal base for insurance interests based outside the EU aiming to tap into the opportunities offered by the largest trading bloc in the world. The new insurance legislation, enacted in 2016, established a credible and effective framework, which is fully in line with EU standards. The high level of professional services available locally inspires confidence, and the low taxation environment supports these qualitative views with clear objective benefits.
Legal framework
When Cyprus became an independent state in 1960, it maintained the English-based legal system which operated during the period of British rule. Section 29(1) of the Courts of Justice Law provides that English common law and the principles of equity apply in Cyprus, provided that they do not conflict with the constitution or with any laws passed since independence by the Cyprus parliament.
Given the relatively small size of the jurisdiction and the correspondingly limited body of domestic case law, much reliance is placed on English decisions. As noted above, Cyprus joined the EU in 2004, and its legislation has been fully aligned with the EU acquis communautaire.
The principal law governing the insurance sector in Cyprus is the Law on Insurance and Reinsurance Services and Other Related Matters of 2016, Law 38(I)/2016, (the 2016 Law), which came into force on April 11, 2016 and implements Directive 2009/138/EC of the European Parliament and Council of November 25, 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II).
The 2016 Law was amended by the Insurance, Reinsurance and Other Related Matters (Amendment) Law of 2017, Law 88(I)/2017, which came into force on July 12, 2017 and added to and amended various articles of the 2016 Law. The 2016 Law repealed the Insurance Services and Other Related Issues Law of 2002 to 2013 and completely revised the system of insurance and reinsurance administration in Cyprus. It may be supplemented from time to time by Regulations issued by the Cyprus Council of Ministers.
Like all laws in Cyprus, the 2016 Law is written in Greek, and the original Greek version prevails over any translation. Although the 2016 Law repealed the previous primary legislation, all the Directives, Decisions, and other Administrative Acts issued under the provisions of the earlier legislation remain in force and are binding to the extent that they are not inconsistent with the 2016 Law, until they are repealed or replaced.
The 2016 Law as amended to date will be referred to together as "the Law".
As noted above, national law in the insurance and reinsurance sector is fully aligned with the relevant EU directives, initially Directive 2008/37/EC of the European Parliament and Council on reinsurance and amending Council Directives 2005/68/EC, 73/239/ EEC, 92/49/EEC and Directives 98/78/EC and 2002/83/EC, and now Directive 2009/138/EC.
Specific objectives of these directives, which have been implemented into Cypriot national law, are to establish a sound and prudent supervisory regime in the interests of policy holders; to allow reinsurers headquartered in the European Union to carry on business throughout the EU under the freedom of establishment and the freedom to provide cross border services; to abolish collateral requirements within the EU or EU reinsurers; and to enable the negotiation and establishments of reciprocal treaties with other regulatory regimes.
The current directive provides a harmonized regulatory framework for reinsurance in the European Union. By establishing a reliable system of supervision of the cross-border reinsurance market, the directive aims to strengthen insurance markets, bringing about such harmonization as is necessary, and sufficient to achieve the mutual recognition of authorizations and prudential control systems, thereby making it possible to grant single authorization valid throughout the EU and to apply the principle of supervision by the home member state.
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Publisher: Thomson Reuters
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