MARKET OVERVIEW
Insurance companies operating in Cyprus cover all insurance sectors. In 2008 there were 34 companies licensed to transact business in the Republic. The functioning of all the insurance companies is regulated according to Cypriot legislation, by the Insurance Companies' Control Service which is a department of the Ministry of Finance.
Premium income in 2008
Premium income encompasses total gross premiums written in Cyprus by Cypriot and foreign insurers licensed to sell insurance in Cyprus as well as branches of European insurers operating in Cyprus.
Total gross premiums written for domestic and foreign business amounted to € 759 mn in 2008. In particular, € 418 mn were written in non-life classes and € 341 mn in life classes.
Similar to the last four years, 2008 witnessed a n upward trend in non- life premiums reflecting the heightened need for protection combined with the ability of insurance products on the market to meet those needs.
Total non-life gross premiums written (excluding policy fees) reached € 418 mn compared to € 378 mn in 2007. Motor insurance remains the biggest non-life class with total premium income in 2008 reaching € 178 mn.
Life insurance showed an increase with total gross premium income up to € 341 mn from € 323 mn in 2007.
In 2008, overall gross premiums written recorded a growth of 8.3% in comparison with a 2007 increase of 12%, on account of the economic crisis.
Gross premium written in life business grew by 6.0% in comparison with 11.0% for 2007. Gross premium written in non - life classes grew by 10.6% compared to 2007 (11.5%) a deceleration which was less effective than life business.
The total percentage of premiums ceded to reinsurance slightly increased from 21.2% in 2007 to 22.2% in 2008. The overall amount of these premiums was equal to € 168,1 mn of which € 130,5 mn in non - life classes and € 37,6 mn in life classes.
Overall gross premiums written, net of the share of ceded premiums, achieved a growth of 8.2 % to € 589,9 mn in 2008 compared to € 545,3 mn for 2007.
The figures exclude business written in Cyprus under freedom of services for which no available data exists.
Claims & Benefits
The amounts of total gross claims incurred reached € 411 mn for the year 2008 in comparison with € 388 mn in 2007 (5.9% increase) : € 197 mn in non - life classes (13.9% increase compared to 2007) and € 214 mn for life classes (0.5% deacrese compared to 2007).
Investments by insurance companies
Legislation concerning insurance company investments
Investment portfolio of insurance companies consists of funds invested for insurance clients to guarantee the payment of claims, benefits or annuities due.
According to the insurance legislation in Cyprus, as from 1st January 2003, companies are obliged to invest, on a continuous basis, in approved assets to cover their technical reserves and must, within 3 weeks from the end of each quarter, submit a register of their investments, accompanied by a statement of their estimation of their technical reserves, in a prescribed form. The minister of finance has issued orders determining the categories of approved investments and the percentage limits that may be invested in each category.
As at 31/12, total investments reached € 1,859 mn, compared to € 2,195 mn in 2007. Of this € 1,646 mn correspond to life investments and € 213 mn to non-life investments.
Shareholders' Funds are not included in the analysis. Total premiums for shareholders' funds reached € 528 mn compared to € 536 mn in 2007.
Life reserves are principally invested in assets giving high expected long term returns while non-life funds are mainly invested in cash and bonds because of the need for liquidity and stability in the value of investments, as a result of the short - term nature of liabilities.