Insurance contracts are on the rise in Cyprus, according to latest figures by the Central Bank of Cyprus. Even though the figures released recently cover the first nine months of 2018, they indicate where the island’s insurance industry stands now.
One key element is that the practice of cashing in and cancelling life insurance policies which rose sharply in 2012 and 2013, is now at a stable pre-crisis level.
In the life insurance sector, total gross premiums recorded in the first nine months of 2018 rose by 10.3% compared to 11% in 2017. New contracts increased by 13% during the same period, from 10% in the corresponding period of 2017.
In the general insurance sector, the increase in total gross premiums recorded in the first nine months of 2018 was 6.2%, compared to 14% in the corresponding period of 2017.
The Central Bank notes that the insurance industry’s recent development, particularly in the property insurance sector, is partly related to the development of the real estate sector and to major construction projects such as marinas, high-rise buildings, hotels and casinos .
In the general insurance industry, the gross cost index has improved – down from 31% for the whole of 2017 to 29% in the first nine months of 2018. And in the life insurance sector, the index remained at 21% over the same periods. This reflects efforts of insurance companies to reduce costs and enhance operational efficiency.
On the solvency of insurance companies, the average ratio for all such companies in Cyprus increased to 281% in September 2018 from 273% in September 2017. Due to the nature of their business, life insurance companies have a higher average solvency ratio (313%) compared to the corresponding average index of the industry’s general insurance companies (250%).
However, the Central Bank does note that a small number of general insurance companies have a relatively low solvency ratio and therefore they may need additional capital in the future. However, due to their small size, they do not pose a risk to systemic disturbances in Cyprus’ financial system.