Cyprus: Financial Sector Assessment Program Update: Technical Note: Insurance Regulation and Supervision
IMF Staff Country Reports, June 1, 2009
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- Cyprus: Financial Sector Assessment Program Update: Technical Note: Insurance Regulation and Supervision
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Bibliographic details
- Published: June 1, 2009
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781451809954.002
Overview
- Examines Insurance Regulation and Supervision for Cyprus’s Financial Sector Assessment Program.
- Emphasizes market structure and regulatory treatment of different insurance lines.
Market structure and key statistics
- The domestic nonlife market is dominated by motor insurance.
- Motor insurance accounted for 58 percent of net premiums.
- All Cypriot business is reinsured with nondomiciled reinsurers.
- Health insurance regulatory classification depends on packaging:
- Regulated as nonlife business when written as add-ons to accident and sickness.
- Regulated as life business when written with life policies.
Regulatory and supervisory arrangements
- A number of professional bodies and self-regulatory industry associations complement the regulatory regime for the insurance industry.
- Subject areas covered (as described): Financial institutions, Financial regulation and supervision, Financial Sector Assessment Program, Financial sector policy and analysis, Insurance, Insurance companies, Insurance supervision, Solvency.
Findings and implications
- Concentration risk: heavy reliance on motor insurance (58 percent of net premiums) indicates concentration in the nonlife market.
- Reinsurance dependency: 100 percent of Cypriot business is reinsured with nondomiciled reinsurers, implying cross-border reinsurance exposures and potential vulnerability to foreign reinsurer credit risk.
- Regulatory classification complexity: differing regulatory treatment of health insurance depending on whether it is bundled with accident and sickness (nonlife) or with life policies (life) may create supervisory and consumer-protection challenges.
- Role of industry bodies: professional and self-regulatory associations play a complementary role to the formal regulatory regime.
International Monetary Fund — Cyprus: Financial Sector Assessment Program Update: Technical Note: Insurance Regulation and Supervision