Hellenic Bank’s Chief Executive Officer Ioannis Matsis has expressed concern over the future of Cyprus’ insurance sector.
Addressing the recent 4th Congress of the Cyprus Actuaries Association in Nicosia, Matsis also raised a number of ‘hot’ questions.
To start with, he pointed out that there are 41 insurance companies in operation today and wondered whether the Cyprus market, which is made up of just over 800,000 residents, could justify this high number.
At a time when international challenges are constantly on the rise as well, and EU demands through Directives (see Solvency II) increase the pressure on solvent companies.
The 41 insurance companies currently in operation employ a total of 4000 people, while the sector contributes 4% to the Cypriot GDP and its investment activities exceed €2.5 billion.
Matsis pointed out that in Greece, which has 12 times the population of Cyprus and its economy is 10 times bigger, only 55 insurance companies are currently in operation.
The CEO then raised the question whether mergers or even the closure of some insurance companies would lead to the whole sector’s increased efficiency.
In addition, he wondered whether there is such a large number of specialised local staff that can be absorbed by the existing companies. Or whether smaller companies just end up with shortages in talent and a compromising result which puts in danger the whole insurance sector.
Matsis also asked whether products provided by insurance companies meet the needs of the rapidly evolving Cyprus economy which is constantly upgraded.
And he wondered whether Cypriot insurance companies could cooperate with international reinsurance companies, creating one or more local reinsurance companies.
Such a development, he argued, would have multiple positive consequences on the Cypriot economy since it would create jobs and keep within the country millions of euros that now go abroad. This would also improve the country’s balance of payments, he said.