Insurance Law

Insurance Sector in Cyprus – Sailing Higher Tides

The insurance industry is in a phase of turbulent change, especially in Europe. The Solvency II Directive of EU Law was one of the biggest harbingers of overhauling the system to unify the entire EU insurance sector and promote consumer protection. This was followed by waves of other significant regulations like the Markets in Financial Instruments Directive (MiFID applied from Jan 2018) and Packaged Retail and Insurance-based Investment Products Regulation (PRIIPS applied from Jan 2018), with the latest being, Insurance Distribution Directive (IDD applied from Oct 2018). These regulations and directives have been applied after decade-long processes, with some of the objectives behind them being, to promote transparency, healthy competition, better risk management, and to reduce dark pools and over-the-counter-trading.

Continuous Growth in Cyprus Insurance Sector

Cyprus has managed to stay on top of all of these changes and has been immensely successful in combating all the challenges thrown at it. The depth of knowledge and expertise possessed by the industry professionals in insurance, along with the constant administrative work to make Cyprus as a friendly regime for insurance businesses has resulted in overcoming hurdles like the 2013 financial crisis, and waves of new regulations, while also resulting in a steady growth of past few years. There are more than 30 companies with their main-bases in Cyprus and over 500 of them which have registered to provide their services in Cyprus via EU agreements.

The Benefits of Cyprus

Along with the obvious geographical advantage of offering ease of access to both European and Asian Markets Cyprus also offers one of the most favorable tax regimes in the world. The regulations and procedures are straightforward and time-saving. It is an EU member compliant with all necessary regulations while also earning repute from being in the OECD White-List. The workforce is one of the most skilled in Europe and the island life offers peace, and safety.

One can find an elaborate study of why to choose Cyprus over any other jurisdiction here.

Legal Overview

The main law governing the insurance sector is the new Insurance and Reinsurance Services and Other Related Issues Law of 2016. This piece of legislation was brought about repealing all old laws to adhere to the requirements of the Solvency II Directive. Some of the significant domestic legislation are Motor Vehicle Third Party Insurance Law 2000-2012 and The Employers Liability Law 1989-2014. The main regulatory body is the Insurance Companies Control Service operating under the Ministry of Finance. The Superintendent of Insurance is the main administrative and licensing post with the responsibility to protect consumer interest. The appellate authority beyond the Superintendent is the Minister of Finance.

Getting a Cypriot Insurance (or Reinsurance) Company

In order to register a Cypriot insurance (or reinsurance) company one must apply to the Superintendent with the prescribed forms, memorandum, and articles of association, other documents of the company and a processing fee for the documents. The companies must also meet all the conditions laid down in the 2016 Law. Some of the conditions are –

* The objects of the company must exclusively be limited to the business of insurance (or reinsurance), or to any related activities to such businesses.

* It maintains the main office and a registered office in Cyprus.

* It submits the scheme of its operations following the Section 24 of the law.

* It qualifies under Section 136 of the law, having enough capital and being capable to cover the Minimum Capital Requirements.

* It possesses its own capital to satisfy solvency capital requirements as laid out in Section 4.

* It complies with the system of governance as laid out in the Law.

* It is compliant to Section 25 on special participation.

* Non-life insurance companies must additionally provide for the names and details of all the representatives appointed for the settlement of claims following the Motor Vehicles Law of 2000.

Cypriot insurance companies can also take advantage of the ‘freedom to provide services’, in the entire EU region and European economic zone after submitting relevant documents to the superintendent who then forwards it to the relevant jurisdictions.

Getting an Insurance license in Cyprus for a Non-EU Company

A non-EU company wishing to register in Cyprus can either do so by establishing a branch or by setting up an agency. The necessary documents and fee must be submitted to the Superintendent and the conditions laid out by the 2016 Law must be satisfied. Some of the essential conditions are –

* A branch is to be established within Cyprus and a scheme of operations to be submitted under Section 178.

* All governance requirements laid out in Section 2 must be fulfilled.

* It appoints a representative in Cyprus who qualifies all the recommended standards.

* It is qualified to conduct the same businesses it wishes to conduct in Cyprus, in the original jurisdiction where it is applying from and which is the main home of the company.

* It establishes an accounts department to maintain all records of its transactions.

* It possesses minimum capital satisfying the section 135 & 136 of the 2016 Law.

* It meets the solvency requirements under the Section 106 of the Law.

* It must also submit a list of names and details of all the representatives for settlement of claims located in all EU states where it provides services where the insurance cover is provided under non-life insurance.

A company applying for a license in Cyprus and also wishing to conduct such business in other EU states can apply for certain advantages on making an application to the Superintendent and to all equivalent authorities in all the respective jurisdictions where it wishes to or is already conducting business. Some of the advantages are –

* Solvency capital requirements can be calculated for all the EU states the company conducts business in combined.

* Statutorily required assets must be localized in only of these jurisdictions.

* Any deposits required to be furnished can also be submitted in any one of the jurisdictions rather than having to submit separate ones in all the states.

Getting an Insurance License in Cyprus for an EU Company

As long as an EU insurance (or reinsurance) company maintains an office with a permanent presence in Cyprus having the same authority as an agent for the company, it can apply for a license to conduct its business in Cyprus. The first step is to approach the insurance authority of its original jurisdiction who would then, in turn, convey the application to the Superintendent of Insurance upon whose discretion the grant of such application depends. It has to satisfy the aforementioned conditions of capital requirements and solvency. It also has to provide its address in Cyprus and in its original jurisdiction, and the organizational structure of the branch. Name and details of the representative in Cyprus. There are a few other requirements to be met if the insurance offered is non-life insurance.

Getting an Insurance License in Other EU State for a Cypriot Company

In the same way, as above-mentioned, the Cypriot company first needs to approach the Superintendent who would then pass on the application to the supervisory authority in the relevant

jurisdiction. The name of the state, scheme of business, the details of the appointed representative, address in Cyprus should also be provided.

Insurance Contracts and Insurance Law – General Summary

Insurance law in Cyprus is based on English law. Also, all insurance law is basically guided by contract law in its most basic form. Thus, for it to be valid there must exist some consideration, an offer, an acceptance and clear meeting of minds on the terms of the contract. One of the essentials of an insurance contract is the existence of an insurable interest. A contract is void ab initio if it is intended for illegal purposes, or against the public good, it is also void if the insured person doesn’t have the insurable interest claimed by them, or if the insured property has been used illegally. Like a regular contract, an insurance contract also becomes voidable for a party, if there’s any misrepresentation of facts or deceitful concealment of material information has taken place on the part of the other party. Non-disclosure especially related to risks involved on part of the insured makes the contract voidable at the discretion of the insurer, but the burden of proof also lies with the insurer. As in contracts, the written and signed documents are the most important part of proving the terms agreed upon. Under the motor vehicles insurance insurers have stricter liability as they have no other options but to pay in case a court judgment has been obtained against the person insured by them. Though insurers are also entitled to recover the amount if the person wasn’t insured.

We Help with Everything Related to Insurance Law in Cyprus

Simon Zenios and Co has extensive experience in incorporating companies within record times in Cyprus, including a significant number of insurance firms. We have skilled personnel with deep knowledge about how to make the entire process simple and straightforward for you. We offer different types of services cut to your custom needs. So that you can kick back and relax while we do all the necessary formalities on your behalf just needing you to provide the relevant documents of identity and legitimacy. We provide for every step of the way to register your EU or Non-EU firm in Cyprus like getting legitimate representatives in Cyprus as needed by the statues.

We also aid insured in cases of insurance claims. Our services are easy on the pocket while also being consistently efficient. Simon Zenios Co takes great pride in successfully representing consumer rights in many previous cases.

Some of the fixed services provided by us are –

* All documentation and formalities for registration or licensing in Cyprus or any other EU jurisdiction.

* Due diligence for Cyprus and other EU jurisdictions.

* Providing independent in insurance claims.

* Representation for denied insurance claims.

* Negotiating premiums in case of the company to company contracts.

* Tax planning and compliance.

* Internal auditing

* Risk management etc.

* Compliance with newer regulations like the Insurance Distribution Directive to be applied from Oct 2018.

We are always available for answering any queries you might have on insurance or any other legal topic under the sun. We are always glad to be of help – Contact us here.