Insurance in Cyprus represents a key element of the economic system and social protection of citizens, regulated by national and European legislation. This area demonstrates a significant variety of forms and types of insurance, adapted to the peculiarities of both the local market and international standards. Let us consider the main aspects related to insurance in Cyprus, including the legal framework, types of insurance, specifics of procedures and current statistics.

Fundamentals of Legislation

In Cyprus, insurance is regulated by the Insurance Services Law, which is harmonized with the EU Directives. Cyprus, as a member of the European Union, is obliged to comply with the general principles established by the Solvency II Directive, aimed at ensuring the financial stability of insurance companies and protecting the interests of policyholders. In particular, the law requires insurance organizations to comply with capital, risk management and transparency requirements.

The Insurance Association of Cyprus (Insurance Association of Cyprus) serves as the coordinating body that oversees the activities of insurance companies. Also important is the role of the Central Bank of Cyprus, which supervises the financial stability of the insurance sector.

Types of insurance

There are various types of insurance services available in Cyprus, which can be divided into compulsory and voluntary.

1. Compulsory insurance:
   • Automobile insurance. By law, all vehicle owners are required to take out a minimum liability insurance policy. In 2023, the minimum coverage amount was €1.22 million for life damage and €1.22 million for property damage.
   • Health insurance. The introduction of the National Health System (GESY) in 2019 changed the structure of health insurance. GESY provides basic health services financed by taxes and citizens’ contributions. However, many residents and businesses choose to purchase additional private health policies for extended coverage.
   • Employers’ Liability Insurance. Employers are required to take out policies that cover risks associated with work-related incidents.
2. Voluntary insurance:
   • Property insurance. This includes protection of homes against risks such as fire, floods and earthquakes. Given the climatic and geographical features of Cyprus, this insurance is popular with locals and foreign property owners.
   • Life Insurance. Policies are offered with both savings and protection features. According to the Cyprus Insurers Association, this type of insurance accounts for about 28% of the total insurance market.
   • Travel insurance. This type of insurance is actively used by both locals and tourists visiting the island. Policies usually cover medical expenses, canceled flights and lost luggage.

Peculiarities of insurance

The insurance policy process in Cyprus is characterized by a high degree of regulation and transparency. Regulated legal norms, a wide range of insurance products and obligations to the European Union form a strict structure of interaction between policyholders and insurance companies. Let us consider the peculiarities of policy issuance, starting with the choice of a company and ending with the claims settlement procedure.

1. Choosing an insurance company

There are over 30 insurance companies operating in Cyprus, including both large international corporations such as Allianz and AIG and local companies such as Trust Insurance and CNP Cyprus. This market offers clients a wide range of insurance services, from compulsory insurance to specialized products such as marine cargo insurance.

Features of choosing a company:

• Reputation and rating. The Insurance Association of Cyprus provides customers with access to public information on insurance company ratings, financial strength and reputation.
• Quality of service. Customers can read reviews in public sources, which is especially important for foreigners seeking support in English.
• Products offered. Companies offer a variety of packages, including combined programs such as car insurance with third-party liability coverage and repair services.

2. Preliminary risk assessment

Before issuing a policy, the insurance company conducts a thorough analysis of the risks associated with the client and the insured object. This process is called underwriting and includes the following steps:

• Data Collection. The client provides information including:
  • Personal data: passport, identification number (Social Insurance Number);
  • Details about the subject of insurance (e.g. technical characteristics of the car or real estate valuation).
• Analysis of the probability of an insured event. For example, for car insurance, the driver’s age and experience, accident history and vehicle condition are assessed.
• Estimation of the cost of the insurance policy. Based on the obtained data, the company offers the client an insurance premium calculation.

3. Forming and concluding the contract

The insurance contract in Cyprus is bilingual in Greek and English, which simplifies the process for foreign clients. The formalization includes the following steps:

• Submission of documents. To execute the policy, the client provides a copy of passport or identification card, proof of address (e.g. utility bill) and other documents related to the object of insurance.
• Examining the terms and conditions of the policy. Companies are obliged to provide the client with full terms and conditions of insurance, including exclusions, limits and penalties for early termination of the contract.
• Signing the contract. After agreeing on all the terms and conditions, both parties sign the contract, which comes into force on the specified date.

4. Payment of the insurance premium

Payment of the insurance premium can be one-time or regular (monthly, quarterly). Most companies offer flexible payment options:

• Bank transfer or card payment. These are the most common payment methods, especially for international customers.
• Online payment. Many insurance companies have introduced modern platforms that allow you to take out a policy and pay online.
• Prepayment discounts. Some companies provide discounts (up to 10%) for paying the entire premium amount in advance.

5. Effect of the contract

Once the contract is issued, the insurance policy becomes effective as of the specified date. Clients receive:

• An electronic copy of the policy. This can be used for digital presentation.
• Physical copy. This is a mandatory requirement for types of insurance such as motor insurance, where the document is presented at police checks or border crossings.

6. Loss settlement procedure

When an insured event occurs, the settlement procedure includes several steps:

• Notification to the insurance company. The client is obliged to report the insured event within a set period of time (usually 24-72 hours). For example, in the case of an automobile accident, it is also necessary to contact the police for a report.
• Filing a claim. The client submits a claim accompanied by documents that prove the occurrence of the insured event (e.g. medical certificates, photos of the damage, police reports).
• Damage assessment. Representatives of the insurance company inspect the object or organize an independent expertise.
• Compensation payment. Once the insurance claim is approved, compensation is paid within a set timeframe. On average, payments in Cyprus are made within 30 days after submission of all documents.

Examples of arrangements

Let us consider two specific examples of insurance:

1. Automobile insurance. A Cypriot citizen takes out a compulsory liability policy. After providing details of his car (make, model, year of manufacture) and his driving license, he receives an offer of €350 per year. The company also offers an additional full coverage policy for €500, which includes theft and damage insurance.
2. Health insurance for a foreign resident. A foreign national residing in Cyprus takes out a private medical policy with coverage for outpatient and inpatient services. After providing medical history and current health data, the cost of the policy was €750 per year. The client opted for a monthly payment by taking advantage of an offer from an online platform.

As of 2024, the insurance market in Cyprus amounted to approximately €1.2 billion, up 5% from 2023. The largest growth is in the health insurance sector, which increased by 8% due to the introduction of GESY. The insurance penetration rate to GDP is around 4.8%, one of the highest in the region.

Challenges and Prospects

One of the key challenges remains the lack of public awareness of insurance products, especially in rural areas. In addition, complex bureaucratic procedures sometimes make it difficult for foreign nationals to obtain insurance policies. However, the digitalization of the insurance industry, including the introduction of online platforms and mobile apps, is gradually removing these obstacles.

Another important trend is the sustainable development of insurance. In recent years, many companies have started to offer policies aimed at supporting environmentally friendly solutions, such as insurance for solar panels and electric cars.

Conclusion

Insurance in Cyprus is a highly developed and regulated system providing financial protection and social support to citizens and organizations. The main features are strict legislative norms oriented towards compliance with European standards and a wide range of insurance products, including compulsory and voluntary types. The process of issuing insurance policies is characterized by transparency and adaptation to the needs of both the local population and foreign clients.

The Cyprus insurance market continues to evolve with the digitalization of services, the introduction of modern technology and the expansion of insurance products, including environmental and investment insurance. However, challenges remain, such as the need to raise public awareness of insurance and to simplify procedures for migrants.

The strategic development of this sector will enhance its role in the country’s economy, build customer confidence and adapt to new global challenges such as climate change and cyber threats. Thus, insurance in Cyprus is not only a tool for protection, but also an important element of sustainable socio-economic development.