(MENAFN Press) The Republic of Cyprus has a small but dynamic economy within the EU. Cyprus became a member of the EU in 2004, adopted the euro in 2008 and is currently holding the EU presidency.
The country was ranked among the world's 31 most advanced economies in 2011 by the International Monetary Fund (IMF) and has emerged as a significant business gateway, supported by its strategic location at the crossroads of Europe, Asia, the Middle East and Africa.
The country has a highly-developed service sector including tourism and financial services. These sectors combined accounted for 73% of the nation's total GDP in 2011.
Cyprus has a small yet developing insurance industry with its contribution to GDP rising from 3.7% in 2001 to 5.5% in 2010.
Over the forecast period, low penetration rates, an ageing population and an increase in healthcare expenditure will to drive the growth of life and personal accident and health insurance segments.
An increased investment in infrastructure and property and construction industry growth will support the demand for non-life products.
Insurance companies with banking backgrounds lead the Cypriot insurance industry
The Cypriot insurance industry is controlled by those insurance companies which are either subsidiaries or affiliates of large banks.
For example, in the life insurance segment Laiki Cyprialife, EuroLife and Universal Life were the three-largest competitors controlling a market share of 70.4% in 2011.
In the non-life segment Laiki Insurance, a subsidiary of the Laiki Bank, and General Insurance of Cyprus lead the segment.
Bank-related insurance companies controlled a 57.6% share of the total insurance industry in gross written premium terms in 2010.
Introduction of Solvency II
The enactment of Solvency II norms in January 2015 is expected to result in a period of consolidation within the Cypriot insurance industry.
Companies are preparing to meet regulatory requirements and looking for ways to increased their capital reserves and risk management standards.
Smaller firms will find it difficult to meet the new requirements given the lack of scale to absorb extra costs.
This is likely to result in a process of consolidation as large companies acquire smaller ones to expand their products and grow through creating synergies.
In 2011, the Cypriot insurance industry recorded its first merger as Interlife and Greek insurance firm Demco insurance merged to form Prime Insurance.
Cyprus positioning itself as an insurance management center
Although the Cypriot insurance industry is relatively small, it has an edge in terms of attracting international insurance management and reinsurance operations.
The nation's high literacy rate of 97.6% of total population in 2011 and the Insurance Institute of Cyprus and the Cyprus Association of Actuaries ensure the adequate availability of skills.
Cyprus' EU membership, coupled with its strategic location, presents an opportunity for insurance companies to expand into the EU and surrounding industries in the Mediterranean region.
Timetric
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