The state-owned Cyprus Asset Management Company (KEDIPES) which was established following the sale of the former Cyprus Cooperative Bank (CCB) holds a hot potato in its hand following the termination in November of insurance mediation agreements with Alianz and Universal Life.
The problem was sparked after the European Central Bank withdrew the Cyprus Co-operative Bank’s operation license and, thus, KEDIPES could not be a mediator for insurance contracts. As a result, over 70 thousand insurance contracts have been affected.
Many borrowers who have red loans and are now with KEDIPES have no insurance and in the event of a death the damages will burden the state-owned company. In the past, the usual way of collecting premiums was to charge the financial facilities of the co-operative credit institution’s clients, including facilities for non-performing loans. Approximately €7 billion of non-performing loans are now with KEDIPES.
After the KEDIPES board evaluated the data, it was considered financially unethical and morally damaging to continue the practice of charging premiums on client loans as it would amount to paying the premiums from a state-owned company, and with almost no chance of future collection. The termination of the insurance services by KEDIPES also affects CCB clients who do not have any credit facilities in the company but have group life insurance contracts that would normally end in late 2018.
Clients of KEDIPES under 60 years of age account for 75% of the company’s portfolio and can benefit from the same or even lower premiums of the group plan that has been terminated. The Finance Ministry said that CCB clients whose loans went to Hellenic Bank have been informed by the take-over lender that they would receive the same insurance coverage at exactly the same cost.
Since the termination of premiums, 70,082 contracts have been affected. It includes 55 thousand customers whose insurance belongs to KEDIPES. Of these, 37 thousand have loans with KEDIPES and the remaining 18 thousand do not have any loans with the company but have group health insurance. KEDIPES has reached agreement with CNP and Universal Life for the provision of insurance in cases where there is interest by CCB clients.
In the meantime, the Legal Service and KEDIPES’ external legal advisers are jointly working on the procedure to be followed in the event that affected clients sue the state company.
Read more:
https://in-cyprus.com/kedipes-generates-income-of-e101m-in-first-four-months-of-operation/
