Country Comparative Guide: Cyprus Insurance & Reinsurance
This country-specific Q&A provides an overview of insurance & reinsurance laws and regulations applicable in Cyprus. Ioannides Demetriou LLC is a contributing firm, where Christina Ioannidou, Partner, and Katerina Hadjichristofi, Partner, provide information about the current issues affecting insurance and reinsurance in Cyprus and address topics such as contract regulation, licensing, penalties, policyholder protection, alternative dispute resolution as well as personal insight and opinion as to the future of the insurance market over the next five years.
We are proud to have consistently upheld our certification with ISO 9001 from 2007 until today, initially with NIS ZERT Hellas and, as from 2012, with the Cyprus Certification Company.
We have maintained our Quality certification in the fields of the provision of services of advocacy, legal advisors, and legal consultants, in all fields of the legal profession, since our formation.
This represents recognition from an accredited independent certification body that we work to the Quality Standards set by the International Certification Network.
We thank our lawyers and staff for their dedication to quality because, as Aristotle said, “Quality is not an act. It is a habit.”
In light of the UK withdrawal from the EU and in the absence of an
agreement that allows insurers and brokers to continue to service clients and
risks located in EU countries, UK insurance firms shall no longer have
passporting rights to European markets including Cyprus.
Passporting rights allow
firms registered in the EEA to do business in other EEA states without
additional authorisation being given from each country. Without passporting
rights, UK intermediaries may not be permitted to place certain European risks
with insurers. Many insurers have been restructuring their business, planning
the relocation or opening of new branches in EU27 member locations including
Cyprus. This will allow them to continue to operate within the EU27 following
Brexit as well as in other jurisdictions where the EU has bilateral trade or
services agreements.
The European Insurance and Occupational Pensions Authority (“EIOPA”) has published a number of recommendations
intended to facilitate an orderly transition of UK insurance business in EU
states post Brexit (the “Recommendations”). The Recommendations set out a
number of principles that will apply to in respect of the conduct of UK
insurance firms which essentially prohibit new business (including renewals)
but allows ongoing administration of insurance contracts which were incepted
before 31 December 2020 until such time they expire or are terminated on the
basis of Recommendation 6 (which effectively states that the location of the
risk remains in the UK (on the assumption that the risk was first underwritten
by a UK insurance entity).
In response to EIOPA Recommendations the Insurance Companies Control
Office (the “Cyprus Insurances Regulator”) has indicated that it intends to follow
and apply all the Recommendations and that they will be issuing relevant orders
for business written in Cyprus by UK companies with respect to each Recommendations,
before the UK withdrawal date.
Whilst, the Cyprus Regulator has yet to issue relevant orders in
connection to the Recommendations, Law 19(I)/2020 was published and is
effective on the 6th March 2020. The said law, by amending national relevant
law, aims to regulate the services offered by British insurance companies in
Cyprus and essentially, the run-off of UK insurance and non-insurance business
which was sold in Cyprus to customers before 31st December 2020. The
new legislation grants to insurance companies and insurance agents offering
insurance products from the United Kingdom to the Republic of Cyprus a two-year
grace period by which they may continue managing the affected portfolios as
follows:
Insurance products already in issued shall continue to
have legal effect without requiring any amendment increasing the overall cost,
British Insurance Companies in Cyprus can settle any
claims arising during the grace period
British Insurance Companies in Cyprus can continue to
collect premiums settle any undertaken liabilities in a business as usual way.
For the affected insurance companies to continue offering services after
the 2-year grace period a relevant license from the Cyprus Insurances Regulator
must be obtained.
It is clear from the above that, UK intermediaries and
entities which intend to continue or commence distribution activities to EU27 policyholders
and for EU27 risks after the UK’s withdrawal are established and registered in
the EU27 in line with the relevant provisions of the IDD. Recommendation 9
requires that intermediaries, which are legal persons, demonstrate adequate
corporate substance, proportionate to the nature, scale and complexity of their
business. Intermediaries should not
display the characteristics of an empty shell.
Our firm provides legal advice and services with respect to the re-domiciliation or new formation of a Cyprus Intermediary (broker, agent etc.) pursuant to the provisions of applicable Cyprus laws which essentially adhere to and adopt the provisions of Directive (EU) 2016/97 of the European Parliament and of the Council of 20 January 2016 on insurance distribution (the “IDD”).
Our firm also advises with respect to Cyprus law matters that may arise with respect to the business of a UK firm including in the context of a UK firm executing an insurance business transfer to an EU group entity to ensure continuity of service and to eliminate any potential detriment to those customers, i.e. transferring customers to whom policies were sold under their freedom of services passporting permissions. Such transfer can resolve the issue of having EEA domiciled customers (whose policies were sold under the freedom of services passporting permissions) by transferring them to EU subsidiaries, however, UK insurers may still have customers who have been sold a product or contract in the UK, but who relocate to an EEA country. This will continue to occur post Brexit and it is expected that the Cyprus Insurances Regulator will also address this issue in due course.
Ioannides Demetriou LLC is recognised as a leading Oil & Gas law firm in Cyprus. It represents major players in the Cyprus market, including government, semi-government, public and private clients in all aspects of the Oil & Gas supply chain, including upstream, midstream, downstream and Liquefied Natural Gas (LNG).
The following article is featured in Gold, The Business Magazine of Cyprus – Supplement with special feature on Oil & Gas Services in Cyprus.
Ioannides Demetriou LLC is featured in GOLD: The Business Magazine of Cyprus, Issue 113, 16th Aug 2020.
“Ioannides Demetriou LLC is an established full services commercial law and litigation firm and is considered a leading law firm in all the fields it operates.”
The Covid-19 pandemic has, undoubtedly, increased the need for adopting different digital technologies in all economic, industrial and business sectors.
Cyprus
has taken considerable steps towards the adoption of digital technologies by
incorporating the provisions of Regulation 910/2014/EU (hereinafter the
“Regulation”), in its national legislation with the enactment of Law 55(I)/18
(hereinafter the” Law”). Both the Law and Regulation establish a legal
framework for e-signatures, e-seals, e-documents and in general all forms of
electronic identification.
Additionally,
on the 1st of March 2020, the Deputy Ministry of Research,
Innovation and Digital Policy was established, one of the most important goals of
which, is the adoption of a national digital policy and the creation of a
powerful digital economy.
As the Deputy
Minister of Research, Innovation and Digital Policy says, more digital services
will be made available for the public in a few months. Such services seem to include the issuance of
a certified copy of birth certificate, the transfer of immovable property to an
individual or even the registration of a company with the Registrar of
Companies.
What the Deputy
Minister has initiated to do is to take small steps to automate services in all
ministries and departments for the benefit of individuals and businesses. These
actions were part of a long-term, two or three year plan, but as it seems,
efforts are being made for the necessary procedures to be concluded within the
following months.
An example of the
goals set by the Government concerns the Citizens Service Centres which up to
now used to accept around 1,000 visitors per day. The goal is to offer services
electronically so that the above number will be reduced to 100 to 200 visitors
per day.
Other government
departments that seem to be in imminent need for digital upgrade is the
Registrar of Companies, the Town Planning and Housing Department and the Land
Registry, while large projects such as the digitalization of hospitals and
courts are estimated to continue according to plan.
Additionally, the
Government seems to be in consultation with the Association of Cyprus Banks so as
to permit to individuals and businesses to conclude their transactions
electronically without being necessary for them to be physically present in
order to sign the appropriate documents.
What is in fact
stressed by the Deputy Minister of Research, Innovation and Digital Policy, is
that the acquisition of an e-signature, in compliance with the provisions of
the Law and Regulation, is a necessary precondition for the said services to be
carried out electronically.
According to the
Regulation, an e-signature can be obtained by a qualified trust service
provider. Currently, in
Cyprus, there is only one provider listed in the Trusted List Browser that is
authorized to provide certificates for qualified e-signatures and that is, JCC
Payment Systems Ltd. The Cyprus Stock Exchange, has assumed the role of a local
registration authority mediating between the applicant and the trusted provider
for the issuance of a qualified certificate for e-signatures. It is noted that according
to the Regulation the acquisition of a qualified signature shall have the equivalent legal effect of a
handwritten signature (Article 25).
Of course,
the legal effect of e-signatures remains to be seen, as, there is no relevant
case law indicating how documents bearing an e-signature will be treated by
Cyprus Courts.
However,
it seems that the Cyprus Government is placing the project of introducing digital technologies
in everyday transactions at its top priorities while it is commonly admitted
that the coronavirus crisis has made the Government to review and reshape its
way of thinking and take considerable steps towards the creation of a new era
which will respond more effectively to the needs this new state of
affairs.
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