MARKET OVERVIEW

Insurance companies operating in Cyprus cover all insurance sectors. In 2006 there were 32 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 2006 

Premium income encompasses 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.

Similar to 2004 and 2005, 2006 witnessed a strong rise 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 premiums (excluding policy fees) reached CY£ 198 mn compared to CY£ 182 mn in 2005. Motor insurance remains the biggest non-life class with total premium income in 2006 reaching CY£ 90 mn.

Underwriting results were positive for all non-life sectors reaching a total of CY£ 12.9 mn compared to CY£ 11.6 mn in 2005. Property insurance generated the most profits.

Life insurance showed an increase with total premium income reaching CY£ 169 mn compared to CY£ 158 mn in 2005, reflecting positive investment climate and increased demand for savings products.

Investments by insurance companies

Investments kept by insurance companies consist of funds invested for insureds 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 the 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. 

Total investments for 2006 was CY£ 1,217 mn, compared to CY£ 1,012 mn in 2005. Of these CY£ 1,098 mn correspond to life investments and CY£ 119 mn to non-life investments. 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.