Chapter 15 Cyprus - Cyprus Lawyers, Cyprus Law Firm · Chapter 15 Cyprus Antonis Glykis * ......

Chapter 15

Cyprus

Antonis Glykis*

I. INTRODUCTION

§ 15:1 Regulatory Bodies and Sources—Legal Framework§ 15:2 —Insurance Regulation§ 15:3 —Scope of Regulatory Framework§ 15:4 —Regulatory Bodies§ 15:5 —Non-Governmental Bodies§ 15:6 Market Structure

II. PRINCIPLES OF INSURANCE LAW

§ 15:7 Meaning of Insurance§ 15:8 Elements of Contract—Parties§ 15:9 —Insurable Interest§ 15:10 —Formation of Insurance Contract§ 15:11 —Void and Voidable Contracts§ 15:12 —Premiums§ 15:13 —Disclosure and Misrepresentation§ 15:14 —Warranties and Conditions§ 15:15 —Cancellation§ 15:16 —Interpretation of Insurance Contracts

III. SPECIAL TYPES OF INSURANCE

§ 15:17 Insurance Covered by Insurance Law§ 15:18 Motor Vehicle Insurance—In General§ 15:19 —2000 Law§ 15:20 —Motor Insurers Fund§ 15:21 Fire Insurance§ 15:22 Accident Insurance§ 15:23 Marine, Aviation, and Transit Insurance§ 15:24 —Employers’ Liability Insurance

*Andreas Neocleous & Co. LLC, Limassol, Cyprus.

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§ 15:25 Miscellaneous Insurance

§ 15:26 —Social Insurance

IV. REGULATION OF INSURANCE PROVISION

§ 15:27 Licensing Requirements of Insurance of ReinsuranceBusiness for a Cypriot Insurance Company—InGeneral

§ 15:28 Licensing Requirements for Non-European Union orNon-European Economic Area InsuranceCompanies—In General

§ 15:29 Licensing Requirements for Insurance Company fromEuropean Union or European Economic AreaCountry Other Than Cyprus—Establishing a Branchor Agency

§ 15:30 Licensing Requirements for Cypriot InsuranceCompany to Provide Insurance Services in EuropeanUnion or European Economic Area

§ 15:31 Establishing an Insurance Mediation—In General

§ 15:32 Establishing an Insurance Intermediary—CypriotMediation

§ 15:33 Establishing an Insurance Mediation—Mediationfrom European Union or European Economic AreaCountry Other Than Cyprus

§ 15:34 —Mediation from Outside the European Union orEuropean Economic Area

V. COMPETITION LAW

§ 15:35 In General

§ 15:36 —Pooling Arrangements

VI. TAXATION

§ 15:37 Value-Added Tax

§ 15:38 Corporation Tax—In General

§ 15:39 —Corporation Tax for Non-Life Insurers

§ 15:40 —Corporation Tax for Life Insurers

VII. CONCLUSION

§ 15:41 In general

INTERNATIONAL INSURANCE LAW & REGULATION

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KeyCiteL: Cases and other legal materials listed in KeyCite Scope can beresearched through the KeyCite service on WestlawL. Use KeyCite to checkcitations for form, parallel references, prior and later history, and comprehen-sive citator information, including citations to other decisions and secondarymaterials.

I. INTRODUCTION

§ 15:1 Regulatory Bodies and Sources—Legal Framework

When Cyprus became an independent state in 1960, theEnglish-based legal system which operated during the period ofBritish rule was maintained. Section 29(1) of the Courts of JusticeLaw1 provides that English Common Law and the principles ofequity apply in Cyprus, provided that they do not conflict withthe Constitution or with any laws passed since independence bythe Cypriot Parliament.

Given the relatively small size of the jurisdiction and the corre-sponding amount of Cypriot case law, much reliance is placed onEnglish legal digests and text books, although these are notbinding. Cyprus has been a member of the European Union (EU)since 1 May 2004, and its legislation has been aligned with theacquis communautaire.

§ 15:2 Regulatory Bodies and Sources—InsuranceRegulation

Insurance companies operating in Cyprus were originallyregistered in England under English insurance legislation. In1969, a law was passed to allow the establishment of local insur-ance companies.

The insurance regulatory regime in Cyprus is governed by theInsurance and Reinsurance Services and Other Related IssuesLaw1 (“the 2016 Law”), which came into force on 11 April 2016.The 2016 Law expressly abolished the Insurance Services andOther Related Issues Law 2002-2013 and thoroughly revised thesystem of insurance and reinsurance administration in Cyprus. Itmay be supplemented from time to time by Regulations issued by

[Section 15:1]1Courts of Justice Law, Law Number 14 of 1960.

[Section 15:2]1Insurance and Reinsurance Services and Other Related Issues Law, Law

Number 38(I) of 2016.

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the Council of Ministers.2 Like all laws in Cyprus, the 2016 Lawis written in Greek, and the original Greek version prevails overany English translation.

All the Directives, Decisions, and Other Administrative Acts is-sued under the provisions of the Insurance Services and OtherRelated Issues Law 2002-2013, which is abolished by the com-mencement of the 2016 Law, remain in force and are binding tothe extent not opposing the 2016 Law, until they will be repealedor be replaced. The wording of 2016 Law is the latest develop-ment to regulate the necessary and sufficient administration andperformance, implementing European Directive 2009/138/EC ofthe European Parliament and Council on reinsurance.

Specific objectives of the Reinsurance Directive, which is beingimplemented into Cypriot national law, are to establish a soundand prudent supervisory regime in the interests of policy holders;to allow reinsurers headquartered in the European Union (EU) tocarry on business throughout the EU under the freedom ofestablishment and the freedom to provide crossborder services; toabolish collateral requirements within the EU or EU reinsurers;and to enable the negotiation and establishments of reciprocaltreaties with other regulatory regimes.

The Directive provides a harmonized regulatory framework forreinsurance in the European Union. By establishing a reliablesystem of supervision of the cross-border reinsurance market, theDirective aims to strengthen the insurance markets. This Direc-tive brings about such harmonization as is necessary, and suf-ficient to achieve the mutual recognition of authorizations andprudential control systems, thereby making it possible to grantsingle authorization valid throughout the Community and to ap-ply the principle of supervision by the home member state.

§ 15:3 Regulatory Bodies and Sources—Scope ofRegulatory Framework

The 2016 Law applies to all insurance and reinsurance busi-nesses, including mediation businesses1 that conduct:

1. Insurance business from direct Life and Non-Life insurance

2Insurance Services and Other Related Issues Law, section 431.

[Section 15:3]1Insurance and Reinsurance Services and Other Related Issues Law, sec-

tion 3(a)(d).

§ 15:2 INTERNATIONAL INSURANCE LAW & REGULATION

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undertakings2 which are established in in Cyprus or whichwish to become established there;

2. Insurance or reinsurance business from undertakings whichare established in a member state other than Cyprus andpursue insurance business in Cyprus under the status offree establishment or the provision of free services;3

3. Insurance or reinsurance business by insurance or reinsur-ance third country undertakings which are registered inCyprus, by virtue of the Companies Law, as an overseascompanies and operate as branches of third country insur-ance or reinsurance undertakings and pursue insurance orreinsurance business within and/or outside Cyprus;4 or

4. Reinsurance business, either within or outside Cyprus, byreinsurance undertakings pursuing only reinsurance activi-ties and which are established within Cyprus or that wishto be established therein.5

Also included are insurance businesses with their head officesin member states of the European Union or European EconomicArea (EEA), seeking to provide services in Cyprus under thefreedom to provide services or the freedom of establishment.6

However, the 2016 Law does not apply to insurance formingpart of a statutory system of social security.7 The 2016 Law doesnot apply to insurance undertakings which fulfil all of the follow-ing conditions and are exempt from the statutory authorization:

1. The undertaking’s annual gross written premium incomedoes not exceed €5-million;

2. The total of the undertaking’s technical provisions, gross ofthe amounts recoverable from reinsurance contracts, andspecial purpose vehicles does not exceed €25-million;

3. Where the undertaking belongs to a group, the total of thetechnical provisions of the group defined as gross of the

2Insurance and Reinsurance Services and Other Related Issues Law, sec-tion 4(1)(a).




6Insurance and Reinsurance Services and Other Related Issues Law, sec-tion 4(1)(b).

7Insurance and Reinsurance Services and Other Related Issues Law, sec-tion 5.

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amounts recoverable from reinsurance contracts and specialpurpose vehicles does not exceed €25-million;

4. The business of the undertaking does not include insuranceor reinsurance activities covering liability, credit and sure-tyship insurance risks, unless they constitute ancillary risks;and

5. The business of the undertaking does not include reinsur-ance operations exceeding €500,000 of its gross writtenpremium income or €2.5-million of its technical provisionsgross of the amounts recoverable from reinsurance contractsand special purpose vehicles, or more than 10% of its grosswritten premium income or more than 10% of its technicalprovisions gross of the amounts recoverable from reinsur-ance contracts and special purpose vehicles.8

Additionally, the 2016 Law does not apply to the provision ofreinsurance cover carried out or fully guaranteed by Cyprus forreasons of substantial public interest, in the capacity of reinsurerof last resort, in particular where, because of a specific situationin a market, it is not feasible to obtain adequate commercialcover.9

Additionally, the Law 2016 apply to all insurance or reinsur-ance undertakings seeking authorization to pursue insuranceand reinsurance activities of which the annual gross writtenpremium income or technical provisions gross of the amounts re-coverable from reinsurance contracts and special purpose vehiclesare expected to exceed any of the amounts set out above withinthe following five years from the date of submitting the relevantapplication. However, the obligation to obtain authorization willcease to apply to those insurance undertakings for which the Su-perintendent has verified that none of the thresholds set outabove has been exceeded for the three previous consecutive years;and none of the thresholds set out above is expected to beexceeded during the following five years.10

§ 15:4 Regulatory Bodies and Sources—RegulatoryBodies

The administrative supervision of the application of the 2016

8Insurance and Reinsurance Services and Other Related Issues Law, sec-tion 6(1).

9Insurance and Reinsurance Services and Other Related Issues Law, sec-tion 12.



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Law is delegated to the Superintendent of Insurance, with theMinister of Finance retaining an appellate role.1 The Superinten-dent and his assistants are public servants, appointed by theCouncil of Ministers, and together they form the InsuranceCompanies Control Service.

The Superintendent grants licenses under the 2016 Law andsupervises those to whom such licenses have been granted,withdrawing such licenses where necessary. He also is expresslyresponsible for safeguarding the interests of policyholders andany other parties entitled to compensation under a contract ofinsurance.2

The Insurance Advisory Committee sits from time to time topropose measures for the improvement of the operation of the in-surance market, the education of those within the insuranceindustry, and to formulate a Code of Conduct for insurancebusinesses.3 The Committee is composed of the Superintendent,his assistants, and four other individuals, appointed by theMinister, after consultation with the Insurance Association ofCyprus.

§ 15:5 Regulatory Bodies and Sources—Non-Governmental Bodies

The Insurance Association of Cyprus is the trade associationfor the Cypriot insurance industry. Member companies accountfor approximately 95 per cent of the insurance business inCyprus. The Association aims to represent its members’ interestsbefore the government, regulators, parliament, and other politi-cal and trade bodies, and to promote the concept of insurancegenerally.

In 1925, the insurance companies then operating in Cyprus,which were principally agencies of British companies, formedthree associations, i.e., the Fire Insurance Association, theMarine Insurance Association, and the Accident InsuranceAssociation. With the continuous growth of life assurance busi-ness, a fourth group was formed in 1976, which then led to cre-ation of the Insurance Association of Cyprus, a company limited


tion 31(1).2Insurance and Reinsurance Services and Other Related Issues Law, sec-

tion 31(2).3Constituted Pursuant to the Insurance and Reinsurance Services and

Other Related Issues Law, section 413(1).

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by guarantee. The Association is a full member of the ComitéEuropéen des Assurances as well as of the International Union ofMarine Insurance.

The Motor Insurers’ Fund is registered as a company limitedby guarantee and is composed of all the insurance companieswhich carry on motor insurance business in Cyprus. It was mod-eled on the English Motor Insurers’ Bureau. Cyprus is a memberof the “Green Card” system, through the Motor Insurers’ Fund.The Fund is described in further detail below.

The Cyprus Hire Risks Pool is an association which pools therisks of insuring public service vehicles, taxis, and hire cars onbehalf of all the Cypriot insurance companies underwriting suchbusiness. The Pool is examined in further detail below. The In-surance Institute of Cyprus is affiliated to the Chartered Insur-ance Institute of England and offers education and training inthe field of insurance.

§ 15:6 Market Structure

During 2015 there were 33 insurance and reinsurance under-takings operating in Cyprus, comprising 32 companies incorpo-rated in Cyprus and one branch of a company incorporatedoverseas. Of the 32 Cyprus companies, 24 are classified as do-mestic business undertakings, which transact all or most of theirbusiness in Cyprus, and eight are international businessundertakings, which transact all or most of their business outsideCyprus.

During 2015, the total gross premiums written by domesticbusiness undertakings and by branches of non-EU undertakingstransacting domestic business amounted close to €700 million.For life business only, the gross premiums were close to €290million, and the gross premiums for non-life business were closeto €410 million.

During 2015, the total gross premiums written by internationalbusiness undertakings and branches of non-EU undertakingswhich transact international business from Cyprus were close to€220 million, comprising €76 million for life business and €134million for non-life business.


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II. PRINCIPLES OF INSURANCE LAW

§ 15:7 Meaning of Insurance

Whereas insurance is defined1 simply as “the carrying on of in-surance business,” neither the 2016 Law nor any of its predeces-sors has ever contained a substantive conceptual definition.

Insurance business is said to mean the business of insurance,reinsurance, and mutual insurance in any of the classes in Ap-pendixes 1 and 2 to the 2016 Law.2 It also is said to mean the ef-fecting and execution by an insurance undertaking of contractswith respect to credit guarantee bonds, execution of contractbonds, administration bonds, release from prison guaranteebonds, custom clearance bonds, or guarantee contracts of a simi-lar nature, as long as these are effected:

1. As part of an insurance undertaking’s business;2. In exchange for the payment of a premium; and3. Not merely as part of non-insurance business carried on by

the party effecting them.

The effecting and execution of contracts for the payment of an-nual annuities on human life also is said by the 2016 Law to con-stitute insurance business.

An insurance contract is specifically defined3 as a contractgoverned by the Contracts Law,4 effected between an insuranceundertaking and one or more insured persons, irrespective ofwhether an insurance policy document is issued, with respect tothe granting of insurance cover in one or more of the classeslisted in Appendixes 1 and 2.


tion 2.2Insurance and Reinsurance Services and Other Related Issues Law, sec-


tion 2.4Contracts Law, Cap. 149.

§ 15:7CYPRUS

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§ 15:8 Elements of Contract—Parties

InsurerAn insurance undertaking or insurer means a Cypriot insur-

ance company or any other undertaking which has as an objec-tive the carrying on of insurance business.1

The legal form adopted under the legislation in force in thecountry where it has its head offices is irrelevant. Lloyd’s ofLondon also is specifically included.

Insured

Any person who is capable of contracting may be insured undera contract of insurance. Thus, an infant may enter into a contractof insurance if it is for his benefit.

The insured is under a duty to disclose to the insurer, prior tothe conclusion of the contract, all material facts within his knowl-edge which the insurer does not or is not deemed to know.

§ 15:9 Elements of Contract—Insurable Interest

According to the English Common Law applicable in Cyprus,an insurable interest is a basic requirement of any contract of in-surance, distinguishing it from a mere wager which would be in-valid as a binding contract.

An attempt to define insurable interest was made in Lucena v.Graufurd,1 where Lawrence J. stated that an interest does notnecessarily imply a right to the whole or part of a thing, nor nec-essarily and exclusively that which may be the subject of priva-tion, but having some relation to or concern in the subject of theinsurance, which relation or concern by the happening of theperils insured against may be so affected as to produce a damage,detriment, or prejudice to the person insuring.2

Certain statutes contain their own definitions of insurableinterest. For example, in the United Kingdom’s Marine Insur-ance Act 1906, the relevant parts of which are applicable inCyprus in the absence of any local legislation, every person whois interested in a marine adventure has an insurable interest.


tion 2.

[Section 15:9]1Lucena v. Graufurd, (1806) 2 B.O.S. & P.N.R. 269, H.L.2Lucena v. Graufurd (1806) 2 B.O.S. & P.N.R. 269, H.L., at p. 302.


630

Specifically, a person is interested in a marine adventure wherehe stands in any legal or equitable relation to the adventure or toany insurable property at risk therein, in consequence of whichhe may benefit by the safety or due arrival of insurable property,or may be prejudiced by its loss, or by damage thereto, or by thedetention thereof, or may incur liability in respect thereof.

In certain kinds of insurance, such as liability insurance and fi-delity or solvency insurance, the very nature of the insuranceimplies the existence of an insurable interest, while other kindsof insurance, such as personal injury insurance, are in practiceeffected by the insured, for the most part, in respect of his ownperson or property. The question of insurable interest becomesimportant when the insured, for his own benefit, effects an insur-ance on the person or property of another.3

In the case of personal injury insurance, the policy may be ef-fected by the insured against the loss which he may suffer byreason of an accident to a third person. In such a case, the exis-tence of the insurable interest is questionable. As a general rule,although the insured must have some interest in the subject mat-ter to entitle him to effect insurance in respect of it, it is not nec-essary that he should specify in the contract, or even disclose tothe insurers, either the nature or the extent of his interest.4

Exceptionally, a specific description of the insurable interest isrequired. This occurs where there is an express condition to thiseffect, or the insurance is for prospective profits or againstconsequential loss, or the interest is material to the risk.5 Theinsurable interest must have a pecuniary value and must be areal interest. However, a right to future possession or a futureinterest also is insurable, but must exist at the time of the loss.Thus, in the case of fire insurance, the assured must show that,at the time of the loss, he had an insurable interest in the objectdestroyed.6

There is a debate whether there is a new approach to the mean-ing of insurable interest and whether it should be approachedrather differently today, especially in the light of the decision of

3Ivamy, General Principles of Insurance Law (2nd ed.), at p. 21.4Ivamy, General Principles of Insurance Law (2nd ed.), at p. 23; MacKenzie

v. Whitworth, (1875) L.R. 10 Exch. 142.5Ivamy, General Principles of Insurance Law (2nd ed.), at p. 24.6Sadlers’ Co. v. Badcock, (1743) 2 Atk. 554.

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the Court of Appeal in Feasey v. Sun Life Assurance Corporationof Canada.7

§ 15:10 Elements of Contract—Formation of InsuranceContract

As in the case of any other contract, a contract of insurancerequires an offer, acceptance, consideration, and an intention tocreate legal relations. There must be a clear agreement as to thedistinctive features of the particular contract. The parties,therefore, must be ascertained, the insurers must have agreed toinsure the particular matter insured, and the insured must haveagreed to the particular insurance.

The parties must agree to all the terms and conditions of thecontract. There are certain essential matters on which there mustbe accord, i.e., the amount of the premium, the nature of the risk,including the subject matter of the insurance, and the duration ofthe risk.1

Although an offer to enter into an insurance contract may bemade by either the proposed insured or the insurer, in practice itis normally made by the proposed insured, usually by completinga proposal form. The offer contained in the proposal form must beforwarded to the insurer to be considered as complete andcommunicated.

The insurer may accept the offer made, or he may accept itwith qualifications, in which case the acceptance may amount toa counter-offer. As a general rule, the acceptance of an offer isnot effective until communicated to the offeror, which also ap-plies in the case of an insurance contract. The insurer may com-municate the acceptance of a proposal made by the prospectiveinsured by:

1. Formal acceptance;2. Issuing of a policy; or3. Acceptance of the premium.

§ 15:11 Elements of Contract—Void and VoidableContracts

A contract of insurance is void if it is illegal, which occurswhere:

7Court of Appeal in Feasey v. Sun Life Assurance Corporation of Canada,[2003] E.W.C.A. Civ. 885, [2003] Lloyd’s Rep. I.R. 637.

[Section 15:10]1Birds, Modern Insurance Law (7th ed., 2007), at p. 82.


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1. The insured does not possess the insurable interest required;2. The contract has been entered into to achieve a purpose

which is illegal or contrary to public policy; or3. The contract is vitiated by the unlawful use of the insured

property.1

In some cases, the validity of a contract of insurance may be af-fected by a mistake. For example, where there is no consensus aditem (meeting of minds), no contractual obligations will havebeen created.2 The question as to what sort of mistake wouldrender a contract void was considered in Bell v. Lever Brothers,3

where it was stated that only a fundamental common mistake af-fecting the subject matter of the contract would render a contractvoid. As far as insurance contracts are concerned, there are threecategories of cases where a common mistake by the insurer andthe insured will render the contract void, namely, where:

1. The insured property does not exist; or2. The person whose life has been insured has died; or3. A compromise has been reached in relation to claims arising

out of an insurance policy, or an assignment of a policy hastaken place and such policy was void or inapplicable,whereas the parties had a different impression.4

A contract of insurance is voidable at the option of the insurerwhere the insured is guilty of fraud, non-disclosure, misrepresen-tation, or breach of a term of the contract which constitutes awarranty.

§ 15:12 Elements of Contract—Premiums

In Lewis v. Norwich Union Fire Insurance Co.,1 premium wasdefined as the consideration given by the insured in return forthe insurer’s undertaking to cover the risks insured against inthe policy of insurance.2 Insurance companies in Cyprus gener-ally issue tables of premiums, showing the rate charged by themfor each class of risk undertaken.

[Section 15:11]1Birds, Modern Insurance Law (7th ed., 2007), at p. 82.2Charalambides, Legal Aspects of Insurance in Cyprus, at p. 4/27.3Bell v. Lever Brothers, (1932) A.C. 161.4Charalambides, Legal Aspects of Insurance in Cyprus, at p. 4/28.

[Section 15:12]1Lewis v. Norwich Union Fire Insurance Co. (1916) A.C. 509, at p. 519.2Birds, Modern Insurance Law (7th ed., 2007), at p. 177.

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Payment of the premium is not generally required for theinsurer to be on risk3 although, particularly in life insurance, thismay be required by a term of the policy. The insured is entitledto a return of premium where there has been a total failure ofconsideration. This arises where the policy is:

1. Never concluded;2. Cancelled ab initio;3. Void or voidable ab initio; or4. Illegal.

§ 15:13 Elements of Contract—Disclosure andMisrepresentation

A representation may establish or render a contract voidable atthe option of the person to whom the representation was made ifit was:

1. Substantially false;2. Material to the risk; and3. An operative inducement to the contract.1

The basic principles of disclosure were stated in the leadingcase of Carter v. Boehm,2 in which Lord Mansfield stated that:

Insurance is a contract of speculation. The special facts, on whichthe contingent chance is to be computed, lie most commonly in theknowledge of the insured only: the underwriter trusts to his repre-sentation, and proceeds on the confidence that he does not keepback any circumstance in his knowledge, to mislead the under-writer into a belief that the circumstance does not exist, and toinduce him to estimate the risk as if it did not exist.

Thus, the insured has a duty to disclose to the insurer at thetime of making or remaking the contract of insurance all thefacts which are material to the risk. Furthermore, whether a factis material is a matter of fact.3 A fact is material for the purposesof both non-disclosure and misrepresentation if it is one whichwould influence the judgment of a reasonable or prudent insurer

3Interamerican Property & Casualty Insurance Co. v. Despina Ioannou,(1996) 1 C.L.R. 1224.

[Section 15:13]1MacGillvray on Insurance Law (5th ed.), at p. 386.2Carter v. Boehm, (1766) 3 Burr. 1905.3Zurich Insurance Co. v. Morisson, (1942) 1 All E.R. 529.


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in deciding whether or not to accept the risk or what premium tocharge.4

Section 15(3)(b) of the Motor Vehicle (Third Party Insurance)Law5 defines material fact as a fact “. . . of such a nature as toinfluence the judgment of a prudent insurer in determiningwhether he will accept the risk and, if so, at what premium andon what conditions.”

For an insurer to obtain the benefit of section 15(3), he mustprove that the policy in question was obtained by non-disclosureor misstatement, i.e., but for that non-disclosure or misstate-ment, the contract which was obtained would not have beenobtained.6 The misrepresentation must be of a fact known, orwhich ought reasonably to have been known, by the insured atthe time he answers the questions in the proposal form.7

The burden of proving that the proposer has made a misstate-ment in the proposal form lies on the insurance company.8 Thisobligation was adopted by the Nicosia District Court in Com-mercial Union Insurance (Cyprus) Ltd. v. Costas Stavrides.9

Although a contract may be voidable on the grounds of a posi-tive misrepresentation with regard to a material fact, only certaincategories of contracts are voidable on the grounds that a mate-rial fact was not disclosed. In an insurance contract, the partieshave an overriding duty to disclose all the material facts,10 as acontract of insurance is one of uberrima fides.11 For the purposesof the 2016 Law, non-disclosure may be defined as the intentionalor unintentional failure of one party to the contract to disclose tothe other party a fact which:

1. Is known to him;2. The other party does not know; and

4Birds, Modern Insurance Law (7th ed., 2007), at p. 120.5Motor Vehicle (Third Party Insurance) Law, Law Number 96(I) of 2000,

as amended by Law Number 66(I) of 2012.6Zurich Insurance Co. v. Morisson (1942) 1 All E.R. 529, at p. 533.7Whitwell v. Autocar Fire and Accident Insurance Co. Ltd., (1927) Ll. L.

Rep. 318, Ch. D.; Joel v. Law Union and Crown Insurance Co., (1908) 2 K.B.863.

8Adams v. London Insurance Co. Ltd., (1932) 42 Ll. L. Rep. 56.9Commercial Union Insurance (Cyprus) Ltd. v. Costas Stavrides (1981)

J.S.C. 1-2, at p. 276.10Michalakis Pavlou v. Egis Insurance Co. Ltd., Civil Appeal 11140 of 18

May 2004.11Paneuropean Insurance Co. v. Electric Leisure Cruises Ltd., Civil Appeal

9539 of 21 March 1998.

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3. Which, if disclosed to the other party, would influence himnot to enter into the contract or, if he had entered into thecontract, would have done so on more favorable terms.12

§ 15:14 Elements of Contract—Warranties and Conditions

A warranty is a term of the insurance contract, following abreach of which the insurer can repudiate the contract. Warran-ties must be strictly complied with. The basic characteristics of awarranty are that:

1. It must be a term of the contract;2. It must be material to the risk; and3. The person who gives a warranty must comply with it.

A breach releases the insurer from his responsibilities, eventhough no losses flowed from the breach or the breach was waivedbefore any losses occurred. In Klitos Mavrides v. Cannon Insur-ance Ltd.,1 it was stated that the proposal, by an express agree-ment, is made part of the insurance agreement and forms thebasis of the contract.

This means that the truth of the statements contained in theproposal is a condition precedent to the liability of the insurers.The answers contained in the proposal constitute a warranty, inthat it is expressly agreed to be so, and a breach of warrantyavoids the contract. It is even immaterial for what purpose thewarranty was introduced.2

§ 15:15 Elements of Contract—Cancellation

Many non-life insurance policies contain a condition entitlingeither party to cancel them on giving notice to the other party.However, a clause permitting immediate cancellation would bestill valid.

Life insurance policies do not normally contain such cancella-tion clauses. However, they generally permit the insured to sur-render the policy after a certain number of years so that theinsured then receives a lump sum, the surrender value. Alterna-tively, they provide for the policy to become paid up, so that nomore premiums are due, but the benefits accruing on death arereduced to the appropriate sum according to the amount ofpremiums paid.

12Charalambides, Legal Aspects of Insurance in Cyprus, at p. 4/32.

[Section 15:14]1Klitos Mavrides v. Cannon Insurance Ltd. (1983) 1 J.S.C. 36, at p. 39.2D. Hahn v. Hartley (1786) I T.R. 343, at p. 345.


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When an insurer alleges that it was induced to issue the policyby reason of fraud, misrepresentation, or non-disclosure on thepart of the insured, it is entitled to apply to the court for an orderthat the policy be delivered up to be cancelled. The power of thecourt to declare the contract void, whether on the grounds offraud, misrepresentation, or non-disclosure, and order cancella-tion of the policy, only exists where the contract is voidable abinitio1 by reason of a defect existing when the contract was made.Similarly, where the insured alleges that he was induced to enterinto the contract contained in the policy by similar conduct onthe part of the insurer or its agents, he is entitled to apply to thecourt for an order rescinding the contract.2

§ 15:16 Elements of Contract—Interpretation ofInsurance Contracts

The following basic rules apply to the interpretation of insur-ance policies:

1. The intention of the parties must prevail;2. The whole of the policy must be looked at;3. The written words will be given more effect than the

printed words;4. The policy must be construed in accordance with the

ordinary laws of grammar;5. The ordinary meaning of the words will be adopted;6. The meaning of a particular word may be limited by the

context;7. The words of the policy must be taken to mean what they

say;8. The words of the policy, if possible, must be construed liber-

ally;9. In case of ambiguity, the reasonable construction is to be

preferred;10. In case of ambiguity, the contra proferentem rule will ap-

ply;1

11. Where the words are repugnant to each other, the courtwill exhaust every means to reconcile the inconsistencies;

[Section 15:15]1Dorothy Pittaras v. Cosmos (Cyprus) Insurance Co. Ltd. (1998) 1 C.L.R.

193, at p. 200.2Ivamy, General Principles of Insurance Law (2nd ed.), at pp. 198 and 199.

[Section 15:16]1Paneuropean Insurance Co. v. Glyki, Civil Appeal 9860 of 22 September

1998; Saturn Building Co. Ltd. v. Interamerican Insurance Co. Ltd., Civil Ap-

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12. An express term overrides any implied term with which itis inconsistent; and

13. Where a matter left uncertain in the policy later becomesascertained, the ascertained part will be treated as if ithad been inserted in the original policy.2

The words of the policy, if possible, must be construed liberally,so as to give effect to the intention of the parties. The words ofthe policy are not to be extended beyond their ordinary meaningto comprehend a case which is within their object and which theparties would probably have desired to include, if it had occurredto them, to give effect to an intention which is not expressed.3

III. SPECIAL TYPES OF INSURANCE

§ 15:17 Insurance Covered by Insurance Law

The Insurance Law covers life insurance,1 industrial insur-ance,2 bond investment, and sinking funds.3

§ 15:18 Motor Vehicle Insurance—In General

Motor vehicle insurance is the business of effecting insuranceagainst damage to or arising out of or in connection with the useof a motor vehicle, including third-party risks. The Motor Vehicles(Third-Party Insurance) Law, Number 96(I) of 2000 (the “2000Law”), as amended by Law Number 97(I) of 2003, Law Number156(I) of 2003, Law Number 168(I) of 2006, Law Number 69(I) of2007, Law Number 92(I) of 2010 and Law Number 66(I) of 2012

peal 10596 of 20 July 2001.2Ivamy, General Principles of Insurance Law (2nd ed.), at p. 291.3Doxoulla Kyriacou v. Philiki Insurance Co. Ltd., Civil Appeal 10328 of 24

March 2000.

[Section 15:17]1“Life insurance business” means the issue of, or the undertaking of li-

ability under, policies of insurance on human life or the granting of annuities onhuman life, but does not include industrial insurance.

2“Industrial insurance” means the business of effecting insurance on hu-man life, premiums in respect of which are payable at intervals of not morethan two months in each case to collectors sent by the insurer to each owner ofa policy at his residence or place of work

3“Sinking fund” means the business of effecting contracts of insurancewhere one party to the contract assumes the obligation to pay, after the expira-tion of a certain period or during a specified period, a certain sum or sums ofmoney to a specified person in return for the payment or the promise of pay-ment from time to time of a certain sum of money by the other party to thecontract.


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replaced the Motor Vehicles (Third-Party Insurance) Law (Cap.333).

It harmonized the obligatory insurance of motor vehicles withthe EU position, modernized the legislation, and opened the wayfor the accession of Cyprus to the Multi-Guarantee Agreement.

§ 15:19 Motor Vehicle Insurance—2000 Law

Motor Vehicles (Third-Party Insurance) LawThe most important changes that were introduced by the 2000

Law were as follows:1. Section 2 included new definitions of the terms “motor vehi-

cle” and “usual place of parking of motor vehicles.” Theterms “Multi-Guarantee Agreement,” “Consultation of theOffices,” “Agreement of Joint Type,” and “Agent for settlingdisputes” also were introduced and explained.

2. It is prohibited under section 3 for a person to use a motorvehicle, unless an insurance against third party risks is ineffect, in relation to its use from the above person, accordingto the provisions of the above law, and to allow any personto use a motor vehicle in relation to its use from anotherperson, according to the provisions of the Law.

3. Section 3(2) created a new category of motor vehicleexempted from obligatory insurance, i.e., any motor vehiclewhich may be used by the Republic for the purposes of theGovernment or for police purposes or may be used by anyperson or category of persons that the Government’s Cabi-net rules should be excluded from the provisions of this.

4. Section 4 requires that every insurance cover shall be issuedby an insurer. In section 4, a provision was added that theinsurance must also provide cover outside Cyprus in anyother member state to any person or persons or categories ofpersons using the motor vehicle, in the event that a death orpersonal injury occurs or damage to property, in case the li-ability arises from the use of a motor vehicle in a street ofCyprus. Any person means persons that are being trans-ferred in pursuance of a contract of employment, membersof the family of the insured, pedestrians, bicyclists, and othernon-vehicle users of the streets.

5. In section 4(2), it is stated that that cover that is beingrequired to be provided above does not need to includepersonal injury or death, including losses and interest ofmore than €30,000,000 for each claim, damage to the insuredcar, and damage to property including losses and interest ofmore than €1,000,000 for each claim.

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6. In section 4(3), the exception relating to liability for death orbodily injury arising out of and in the course of the employ-ment of a person by the insured only applies where the li-ability is covered by insurance under the CompulsoryEmployers Liability Insurance Law.1

7. A new part was introduced, in sections 27–35, which relatesto the Motor Insurers Fund. The sections state that membersof the Fund comprise all the insurance companies who oper-ate a department for motor vehicle liability in Cyprus, thatthere is a binding agreement between the Minister ofFinance and the Fund, and that, according to the agree-ment, the Fund undertakes the obligation to pay, in certaincases and under certain circumstances, compensation tothird parties including persons who were injured or died asa result of the liability of unknown drivers and who are notin a position to obtain compensation from any other source.The sections also provide for the subrogation rights of theFund and the procedures for payment of compensation fromthe Fund, settlement in case of difference arising between athird party and the Fund, and submission of claims in rela-tion to the liability of unknown drivers.

Policy

For the purposes of the 2000 Law, an insurance policy must beone which:

1. Is issued by an insurer;2. Insures such person, persons or classes of persons as may be

specified in the policy in respect of any liability which maybe incurred in respect of the death of or bodily injury to anyperson caused by or arising out of the use of a motor vehicleon a road in Cyprus;

3. Insures such person or persons in respect of any liabilityarising by virtue of the provisions of the Law in respect ofthe payment of any expenses incurred for emergency treat-ment; or

4. Insures such person or persons in respect of any liability forany damage to property caused by or arising out of the useon the road of a motor vehicle covered by a policy.

The policy is not required to provide cover in respect of damageto:

[Section 15:19]1Law Number 174 of 1989, amended by Law Number 198(I) of 2014.


640

1. Any property asset incurred during the loading or unloadingof or transportation by, in or on a motor vehicle; or

2. Any property asset which belongs to or is in the possessionor custody or under the control of the insured or any memberof his household.

No person may use or cause or permit any other person to usea motor vehicle on a road unless there is in force in relation tothe use of that motor vehicle by such person or such other person,as the case may be, such a policy in respect of third party risksas is provided for by law. Any person acting in contravention ofthis requirement is liable to imprisonment for up to one year or afine of up to €1,708 or both. A person convicted of an offence willbe disqualified2 from holding or obtaining a driving license.

The insurance, to be valid, must be issued and delivered as aninsurance certificate. The certificate will be considered asdelivered when it has been personally received by the insured orhis authorized representative, sent by post or sent by telefax ore-mail.

Insurer’s Liability

Section 14 provides that, if a certificate of insurance has beenissued in favor of a person, a judgment against him obtained inrespect of any liability which is compulsorily insurable must besatisfied by the insurer, whether or not the latter has the right toavoid or cancel the policy. The obligation of the insurer includespayment to the person entitled to the benefit of the judgment ofany sum payable in respect of the liability, costs, and interest.

The 2000 Law added two new provisions concerning this obliga-tion, i.e., that insurers are obliged to satisfy court judgmentswhich have been obtained against any person, even if he is notcovered by insurance, except where liability is excluded, and thata driver’s liability will be covered, even in cases where he doesnot hold a license authorizing him to drive the motor vehicle.3

The insurer who becomes responsible for paying any amountunder these provisions has the right to recover it from theinsured. Where the insurer becomes liable to pay any amount re-lating to the liability of a person who is not covered by insurance,

2Nicosia Police and Djemal Ahmet, 3 R.S.C.C. 50; Eleftheriou v. The Police,(1992) 2 C.L.R. 300; Elias Poullis v. The Police, (2000) 2 C.L.R. 57.

3A term of the insurance which purports to limit the cover in relation tothe possession or otherwise of a driving license will be treated as void in rela-tion to the driver’s liability to third parties.

§ 15:19CYPRUS

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he is entitled to recover it from such a person or any other personwho is covered by the insurance, according to the terms of whichthe liability would be covered if the insurance provided cover toany person, and who provoked or permitted the use of the motorvehicle which created the liability.

The term “exempted liability” in section 14(3) means the li-ability in relation to the death or bodily injury or damage to theproperty of any person who, at the time of the use which causedthe liability, is being carried voluntarily in or on the motor vehi-cle and who knows or has reason to believe that the motor vehi-cle was stolen or was illegally possessed and taking intoconsideration that the person was not a person who knew or hadany reason to believe that the motor vehicle was stolen or was il-legally possessed only after the start of the journey and it wouldnot be reasonable to expect such a person to disembark from themotor vehicle.

An insurer is not liable to pay any sum if:

1. The insurer was not given written notice of the proceedings,i.e., the date of the filing of the writ, against the insuredbefore or within seven days of their commencement;

2. In the case of a judgment which concerns damage to prop-erty, the insurer was not given notice, by the person inwhose favor the judgment was issued, within six months ofthe date of the creation of the claim in relation to which thejudgment was issued of his intention to make a claim, or theinsurer was not given written notice so as to have a reason-able time to inspect the relevant damage before it wasrepaired;

3. Execution of a judgment has been stayed pending an appeal;4. The insured’s policy was cancelled before the relevant event,

by mutual consent or under a term in the policy, and thecertificate of insurance was surrendered or the insured madea statutory declaration that it was lost or destroyed within14 days of the cancellation or within the same period theinsurer commenced proceedings in respect of the failure tosurrender the certificate; or

5. The insurer, within three months of the commencement ofthe proceedings against the insured, obtains a declarationby the court that the policy was obtained by non-disclosureor misrepresentation of a material fact and has given noticeof the action for a declaration and particulars of the non-disclosure or misrepresentation within seven days of itscommencement.

If the insured goes bankrupt or enters into a composition or ar-


642

rangement with his creditors or if a company goes into liquida-tion, administration, or receivership, the insured’s liability in re-spect of compulsory insurance to the third person,notwithstanding anything contained in any law to the contrary,shall be transferred to and vest in the third party to whom the li-ability was so incurred.

§ 15:20 Motor Vehicle Insurance—Motor Insurers Fund

After Cap. 333 (as noted above, Cap. 333 has been abolished)came into force, many owners and drivers of vehicles did nothave the required insurance cover and consequently some victimsof road accidents received no compensation.

Section 55 of the Insurance Companies Law of 1967, whichcame into force in 1969, gave the Minister of Finance the powerto establish a fund that would cover such cases. In 1969, the Mo-tor Insurers Fund (MIF) was set up, modelled on the Motor Insur-ers Bureau in England, and was registered as a company limitedby guarantee whose members were insurance companies whichcarried on motor insurance business in Cyprus.

On 22 April 1969, the Minister of Finance and the President ofthe MIF signed an agreement, known as the Principal Agree-ment, by virtue of which the MIF has undertaken to indemnifyvictims of road accidents, who otherwise would receive nocompensation, in cases where there is an uninsured driver, anunknown driver or ineffective insurance, i.e., the policy was voidor voidable.1

On 18 July 1972, a Supplementary Agreement was signed,providing that the MIF could be called on to pay compensation inthe case of insolvency of the insurer. Before the signing of theSupplementary Agreement a Protocol was signed, providing forthe payment to the MIF by its members of one per cent of thegross premiums received. This percentage was increased to threeper cent and then reduced to two per cent.

Insurance companies have the right to impose terms excludingparticular drivers from cover totally or allowing them to beincluded but only subject to certain conditions. Where the policyis void or voidable because the insured has violated any of theconditions of the policy, the MIF is obliged to pay compensation.

[Section 15:20]1The Motor Insurers Fund has no obligation to compensate the victim, but

has discretion to do so on an ex gratia basis if the victim has sustained perma-nent bodily injury or died and provided that it can be proved that the uninsuredor unknown driver was liable for the accident.

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To avoid the possibility that insurance companies would includemany conditions in their contracts and so refer numerous casesto the MIF, an Internal Agreement was signed on 6 March 1969between the MIF and its members. The Principal Agreementspecifies the conditions precedent to the liability of the MIF,namely:

1. The applicant or his lawyer must give to the insurer or, if noeffective policy exists, to the MIF a notice in writing sent byregistered mail, within seven days from the start of courtproceedings;

2. Where the claim concerns personal injuries and damage toproperty or only damage to property, the applicant or hislawyer must give, in addition to the notice specified above, aspecial notice immediately after the accident and before thevehicle is repaired;

3. A copy of the writ of summons or the statement of claimmust be given to the insurer or the MIF; and

4. If a judgment is issued against an uninsured driver and thesum awarded by the judgment is paid by the MIF, the ap-plicant must assign to the MIF any judgment obtained byhim against the MIF.

§ 15:21 Fire Insurance

Fire insurance business means the issue of, or the undertakingof liability under, policies of insurance against loss or damage byor incidental to fire.

§ 15:22 Accident Insurance

Accident insurance business is the issue of, or the undertakingof liability under, policies of insurance on the happening ofpersonal accidents, whether fatal or not, disease, or sickness.

§ 15:23 Marine, Aviation, and Transit Insurance

Marine, aviation, and transit insurance is the business of ef-fecting and carrying out, other than incidentally to another classof insurance business, contracts of insurance relating to:

1. Vessels or aircraft or the machinery, tackle, furniture, orequipment of vessels or aircraft;

2. The goods, merchandise, or property of any description what-ever on board vessels or aircraft;

3. The freight of, or any other interest in or relating to, vesselsor aircraft;

4. The damage arising out of or in connection with the use ofvessels or aircraft, including third-party risks;


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5. The risks incidental to the construction, repair or docking ofvessels, including third-party risks;

6. The transit risks (whether by sea, inland water, land, or air,or partly one and partly another), including risks incidentalto transit insured from the start of transit to the ultimatedestination covered by the insurance, but excluding risksthe insurance of which is motor-vehicle insurance business;and

7. Any other risks, the insurance of which is customarily un-dertaken in conjunction with or as incidental to any busi-ness referred to in the foregoing paragraphs of thisdefinition.

There is no law in Cyprus concerning marine insurance, butthe English Marine Insurance Act 1906 is applicable. In recentyears, the Supreme Court of Cyprus, in its Admiralty jurisdic-tion, has dealt with a considerable number of marine insuranceclaims and has awarded large sums as damages.

§ 15:24 Marine, Aviation, and Transit Insurance—Employers’ Liability Insurance

Employers’ liability insurance is the issue of, or the undertak-ing of liability under, policies insuring employers against liabilityto pay compensation or damages to workmen in their employ-ment, but does not include any business carried on as incidentalto marine, aviation, and transit insurance. The compulsoryemployers’ liability insurance business is regulated by theCompulsory Employers’ Liability Insurance Law,1 which wasmodelled on Cap. 333.

Under section 3 of the Compulsory Employers’ Liability Insur-ance Law, employers’ liability insurance is not compulsory if theemployer is the Republic of Cyprus, the employer belongs to acategory expressly exempted from compulsory employers’ liabilityinsurance by the Council of Ministers, or the nature of theemployment is such as is prescribed by Part II of the First Sched-ule to the Social Insurance Law.2

Compulsory employers’ liability insurance also covers Cypriotemployees working outside Cyprus for any employer, not neces-sarily Cypriot companies or foreign or international companiesregistered in Cyprus.

[Section 15:24]1Law Number 174 of 1989, amended by Law Number 198(I) of 2014.2Social Insurance Laws, 1980–1995.

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Section 17 of the Compulsory Employers’ Liability InsuranceLaw provides for the establishment of a fund similar to the MIF,the object of which will be to satisfy any claims with regard to:

1. Any risks which are not covered by insurance, whetherwholly or partially;

2. A void policy; and3. The insolvency of the insurance company.

Any condition in the insurance policy which seeks to impose arestriction on the cover of the insured person (i.e., the employer)in relation to the number, age, sex, physical or mental condition,nationality, level of education, training or capacity of employees,or the place, time, duration, means of protection, nature of thework or remuneration of the employees, or any discriminatoryterm towards the employees, will not be valid in terms of theemployers’ liability.3

§ 15:25 Miscellaneous Insurance

Miscellaneous insurance is the business of effecting contractsof insurance not principally or wholly related to any of the otherclasses of insurance business. Within the scope of miscellaneousinsurance business fall private liability insurance, professional li-ability insurance, public liability insurance, pollution liability in-surance, medical insurance, and travel insurance.

Medical and travel insurance are well known in Cyprus, butthe other kinds of insurance are comparatively new to the Cyp-riot insurance industry and are not yet in common use.

§ 15:26 Miscellaneous Insurance—Social Insurance

Social insurance in Cyprus is regulated by the Social InsuranceLaw Number 59(I) of 2010. There is a Social Insurance Schemewhich is exclusively operated by the state. The Scheme covers allemployed and self-employed persons, except for foreign employ-ees of international companies registered in Cyprus. Foreignerswho are employed by Cypriot companies or individuals arecovered by the Scheme.

The contribution payable in relation to an employee is 20.2 percent of his insurable earnings, of which 7.8 per cent is paid bythe employee, 7.8 per cent by the employer, and 4.6 per cent by

3Compulsory Employers’ Liability Insurance Law, as amended, section7(2).


646

the Social Insurance Fund.1 In the case of a self-employed person,the contribution is 19.2 per cent of his insurable earnings, ofwhich 14.6 per cent is paid by the self-employed person and 4.6per cent by the Social Insurance Fund.2 The benefits provided bythe Social Insurance Scheme are:

1. Maternity Benefit;2. Sickness benefit;3. Unemployment benefit;4. Old age pension;5. Invalidity benefit;6. Widow’s benefit;7. Orphan’s benefit;8. Missing person’s benefit;3

9. Matrimonial benefit;10. Childbirth benefit;11. Funeral benefit;12. Death benefit;13. Personal injury benefit; and14. Disability benefit.

IV. REGULATION OF INSURANCE PROVISION

§ 15:27 Licensing Requirements of Insurance ofReinsurance Business for a Cypriot InsuranceCompany—In General

For a license required by a Cypriot insurance company to carryon insurance business or reinsurance undertaking1 in Cyprus,the following conditions must be met:

1. With regard to insurance undertakings, they must limittheir objects to the business of insurance and operationsarising directly there from, to the exclusion of any othercommercial business;

[Section 15:26]1Social Insurance Law Number 59(I) of 2010, section 5(d).2Social Insurance Law Number 59(I) of 2010, section 12.3“Missing person” refers to persons who have been missing since the Turk-

ish invasion of 1974 and for whom there is no positive information as to theirwhereabouts.

[Section 15:27]1“Cypriot reinsurance undertaking,” according to section 2 of the 2016

Law, means that the reinsurance undertaking that has been licensed by the Su-perintendent to do so, under section 14 and has been licensed according to sec-tion 19.

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2. With regard to reinsurance undertakings, they must limittheir objects to the business of reinsurance and relatedoperations, including a holding company function andactivities with the function and activities of a holdingcompany in the financial sector, within the meaning of thedirectives on financial conglomerates which are issued bythe Superintendent;

3. A scheme of operations has been submitted in accordancewith section 24 of the Law;

4. The undertaking has available basic own funds eligible tocover the absolute floor of the Minimum Capital Require-ments, provided for in paragraph (d) of subsection (1) ofsection 136 of the Law;

5. The undertaking demonstrates that it is in a position tomake available own funds eligible to cover the solvencycapital requirements, as provided for in section 4 of ChapterSix of this Part;

6. The undertaking demonstrates that it is in a position tomake available basic own funds eligible to cover the mini-mum capital requirements, as provided for in section 5 ofChapter 6 in this Part;

7. The undertaking demonstrates that it is in a position tocomply with the system of governance referred to in section2 of Chapter 4 of this Part;

8. It satisfies the conditions in section 25 of the Law on specialparticipation;

9. The undertaking maintains both its head office andregistered office in Cyprus;

10. With regard to non-life insurance, the undertaking mustcommunicate the name and address of all the representa-tives for the settlement of claims, who are appointed in ac-cordance with the provisions of the Motor Vehicles (ThirdParty Insurance) Law of 2000, as amended or replaced atany given time, out of Cyprus, if the risks covered are clas-sified in the class of civil liability for land vehicles (class 10in Part A of the First Appendix in the Law), excluding car-rier’s liability; and

11. With regard to undertakings which apply for authorizationfor assistance (class 18 in Part A of the First Appendix),the undertaking satisfies the Superintendent, following arelevant check, that the staff, the material and the methodsthat have directly or indirectly available, including thequalifications of the medical staff and the quality of theequipment at its disposal to respond to the obligationsimposed by this class, are appropriate.


648

The application for the pursuit of insurance or reinsuranceoperations by an undertaking is submitted to the Superintendentin the prescribed form and contains the particulars determinedin the application, with the memorandum of association andarticles of association of the undertaking, which should be ap-proved by the Superintendent, including the other documentsthat are specified by Regulations issued under the 2016 Law andare submitted to the House of Representatives for approval;2

Furthermore, the Superintendent may at any time after submit-ting the application to request that further particulars areproduced, that he deems necessary in order to examine the ap-plication and a fixed fee must be paid in order to examine the ap-plication when it is submitted.

A Cypriot insurance company may apply to the Superintendentfor permission to establish a branch or an agency in anothermember state of the European Union or European EconomicArea, under its freedom of establishment. The company must dis-close the states in which it intends to undertake business, andsubmit a business plan. A general representative must have beenappointed in the other states.3 Having considered the plan,administrative structure, financial situation, and qualifications ofthe managers and general representatives, the Superintendenthas the right to refuse permission.4

As far as the Superintendent in Cyprus is concerned, theagency or branch may start business in the other states followingthe notification of conditions, if any, by the supervisory authorityof the other states to the Superintendent, or in any event withintwo months of the grant of permission by the Superintendent.5

It is prohibited for insurance companies to exercise within theRepublic other businesses except of the insurance. In relation toCypriot insurance companies the prohibition applies also for theirbusinesses outside Cyprus.6 Additionally, reinsurance undertak-ings are to limit their objects to the business of reinsuranceundertaking to carry on, for instance, activities, such as provisionof statistical or actuarial advice, risk analysis, or research for its

2Insurance and Reinsurance Services and Other Related Issues Laws, sec-tion 158(3).




6The 2016 Law, section 17(1).

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clients. It also may include a holding company and activities withrespect to financial sector activities.7

Cypriot insurance companies also may conduct insurance busi-ness in other member states of the European Union or EuropeanEconomic Area, using their freedom to provide services, oncevarious documents have been submitted to the Superintendentand been forwarded by him to the supervisory authorities of thestates concerned. The Superintendent may refuse to forwardthese if they are not in order.

Cypriot insurance business (undertaking) or reinsuranceundertakings are able to transfer all or part of their portfolios ofcontracts, including those concluded either under the right ofestablishment or the freedom to provide services, to an acceptingoffice within or out of Cyprus, if the competent authorities of thehome member state of the accepting office certify that, after tak-ing the transfer into account, the latter possesses the necessarysolvency margin.8

§ 15:28 Licensing Requirements for Non-European Unionor Non-European Economic Area InsuranceCompanies—In General

Section 4(1)(c) of the 2016 Law states that:

“. . . the provisions of this law govern. . . the pursuit of insuranceor reinsurance business by insurance or reinsurance third countryundertakings which are registered in Cyprus, by virtue of theCompanies Law, as an overseas companies and operate as branchesof third country insurance or reinsurance undertakings and pursueinsurance or reinsurance business within and/or outside Cyprus.”

A third country insurance undertaking is defined1 as:

“. . . a direct Life or Non-Life undertaking, which has received au-thorization to operate and is supervised by a third countrycompetent authority and which, if its head office were situated inthe Union, would require authorization to pursue insurance busi-ness from the supervising authority of the home member state”;

A third country insurance company seeking to undertake in-surance business in Cyprus may do so either as a branch or an

7The 2016 Law, section 17(2).8The 2016 Law, sections 195 and 200.


tion 2.


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agency registered under the Companies Law,2 following the grantof a license by the Superintendent. For such a license to be is-sued, the following conditions3 need to have been fulfilled:

1. A valid application has been submitted, the necessary docu-ments and fixed fees have also been submitted;

2. It is entitled to pursue insurance or reinsurance business,as the case may be, under the legislation of the thirdcountry in which the supervision is subject;

3. It establishes a branch in in Cyprus;4. It undertakes to establish in Cyprus an accounts depart-

ment First Appendix. specific to the business which itpursues there, and to keep there all the records relating tothe business transacted;

5. It appoints a representative, to possesses the qualificationestablished by Regulations that are submitted to the Houseof Representatives for approval and approved by the Su-perintendent;

6. It possesses in Cyprus assets of an amount equal to atleast one half of the absolute floor prescribed in paragraph(d) of subsection (1) of section 136 of the Law in respect ofthe Minimum Capital Requirement and deposits one fourthof that absolute floor as security;

7. It undertakes to cover the Solvency Capital Requirementand the Minimum Capital Requirement in accordance withthe requirements referred to in sections 106 and 135 of theLaw;

8. It communicates the name and address of the claims repre-sentative appointed in each Member State in which the au-thorization is sought where the risks to be covered areclassified under motor vehicle liability (class 10 of Part Aof the First Appendix), other than carrier’s liability;

9. It submits a scheme of operations in accordance with theprovisions in section 178 of the Law; and

10. It fulfils the governance requirements laid down in section2 of the Fourth Chapter of Part II of the Law;

11. Regarding third country insurance or reinsurance under-takings, the following provisions4 also apply where they fallwithin the scope of application of this section;

2Company Law, Cap. 113.3Insurance and Reinsurance Services and Other Related Issues Law, sec-


tion 181.

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12. Where an undertaking that pursues or intends to pursueinsurance or reinsurance business in Cyprus, also pursuesor intends to pursue such business at the same time in oneor more than one member states, the Superintendent maygrant the following advantages that are provided for inparagraph (d) of this subsection and which may be grantedonly jointly;

13. The application to be granted the advantages shall be madeto the Superintendent and to all the competent supervisoryauthorities of the member states in which this undertakingpursues or intends to pursue insurance business;

14. The Superintendent issues his decision to grant the advan-tages by consent with the other competent supervisoryauthorities with which the application was submitted; and

15. The advantages comprise the following: (a) the solvencycapital requirement referred to in section 180 of the Lawmust be calculated in relation to the entire business whichit pursues within the Union; (b) the deposit required underparagraph (f) of subsection (2) of section 177 may be lodgedin only one of those member states where the undertakingpursues its activities; and (c) the assets representing theminimum capital requirement must be localized, in accor-dance with section 141, in any one of the member states inwhich it pursues its activities.

§ 15:29 Licensing Requirements for Insurance Companyfrom European Union or European EconomicArea Country Other Than Cyprus—Establishing aBranch or Agency

An insurance undertaking of a member state may establish abranch within Cyprus to pursue insurance operations with theright of establishment, if the conditions are satisfied and theprocedures of the 2016 Law are followed.1 Any permanent pres-ence of an undertaking in in Cyprus must be treated in the sameway as a branch, even where that presence does not take theform of a branch, but consists merely of an office managed by theown staff of the undertaking or by a person who is independent


tion 158(1).


652

but has permanent authority to act for the undertaking as anagency would.2

An insurance undertaking of a member state that proposes toestablish a branch within Cyprus must notify its intention to thesupervisory authority of the home member state which, in turn,transmits to the Superintendent its, intention, also certifyingthat the insurance undertaking actually covers the solvencycapital requirements and the minimum capital requirementsdetermined in sections 106 and 136 of the 2016 Law, togetherwith the following documents and information:

1. A scheme of operations setting out, at least, the types ofbusiness envisaged and the structural organization of thebranch;

2. The name of the representative, who demonstrates througha power of attorney duly ratified that he possesses sufficientpowers to bind, in relation to third parties, the insuranceundertaking of a member state or, in the case of Lloyd’s, theunderwriters concerned and to represent it or them beforethe authorities and courts of Cyprus (the “authorized agent”);

3. The address in Cyprus from which documents may beobtained and to which they may be delivered, including allcommunications to the authorized agent; and

4. With regard to Lloyd’s, in the event of any litigation inCyprus arising out of underwritten commitments, theinsured persons may not be treated less favorably than ifthe litigation had been brought against businesses of aconventional type.3

Where a non-life insurance undertaking intends its branch tocover, covered by motor vehicle liability (Class 10, Part A, FirstAppendix of the Law, not including carrier’s liability, it must pro-duce a declaration that it has become a member of the nationalbureau and the national guarantee fund in accordance with theprovisions of the Motor Vehicles (Third-Party liability) Laws of2000 as amended or replaced at any given time.4

The Superintendent, within a period of two months from receiv-ing all the necessary documents and particulars determined fromthe supervisory authority of the home member state, may com-




§ 15:29CYPRUS

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municate to the supervisory authority of the home member state,the terms under which, for reasons of public interest, the insur-ance undertaking of a member state in Cyprus must pursue theoperations, which the supervisory authority of the home memberstate shall communicate to the insurance undertaking.5

§ 15:30 Licensing Requirements for Cypriot InsuranceCompany to Provide Insurance Services inEuropean Union or European Economic Area

A Cypriot insurance undertaking wishing to establish a branchin another member state must notify its intention to theSuperintendent.1 A Cypriot insurance undertaking must ac-company the notification to the Superintendent with the follow-ing documents and information:

1. The name of the member state, in the territory of which itintends to establish the branch;

2. Its activities program, which must at least mention the typeof its proposed business and the administrative structure ofthe branch;

3. The name of the person, who is designated through a powerof attorney duly ratified that it has adequate power to bind,against third parties, the insurance undertaking and to rep-resent it or them before any authorities and the courts ofthe host member state (the “general agent”); and

4. The address in the host member state at which it is possibleto request and deliver documents, including all the com-munications addressed to the general agent.2

Where the insurance undertaking is active in non-life insur-ance and intends to cover, through its branch, motor vehicle risks(Class 10, Part A, First Appendix of the Law), not including car-rier’s liability, it must submit a declaration, within the timeframe set by the host member state, that it will become a memberof the national bureau and the national guarantee fund of the



tion 159(1):2Insurance and Reinsurance Services and Other Related Issues Law, sec-

tion 159(2).


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host member state.3 Where the content of the information com-municated has been amended, the insurance undertaking willnotify in writing the Superintendent of the amendment, as wellas the supervisory authority of the member state where thebranch is located, at least one month before the amendment takeseffect, so that the Superintendent may fulfil his obligations in ac-cordance with the provisions of section 158 of the 2016 Law.4

§ 15:31 Establishing an Insurance Mediation—In General

Insurance mediation business is defined as the:

“. . . activities which consist of introducing, proposing preparatorywork to the conclusion of contracts of insurance or reinsurance, orof concluding such insurance or reinsurance contracts, or of assist-ing in the administration and performance of such insurance or re-insurance contracts, in particular in the event the insurance riskoccurs”;1

The Superintendent keeps Insurance Sub-Agents’ Registers ac-cording to the provisions of this Part and decides on the registra-tion or deletion of any person on such a Register.2 Furthermore,the Superintendent supervises the pursuit of mediation activitiesand of the sub-agents pursuing such activities.3 Additionally, inexercising his responsibilities and powers, the Superintendentshall cooperate with the supervisory authorities of other memberstates or the corresponding third country supervisory authoritieswith regard to the supervision in the pursuit of mediationactivities.4

Insurance mediation business can be pursued by reinsuranceagents, insurance or reinsurance brokers, insurance or reinsur-ance sub-agents, insurance or reinsurance advisors as well asancillary insurance advisors who are registered as such by the







tion 357(4).

§ 15:31CYPRUS

655

Insurance Companies Control Service of the Ministry of Finance.5

Before the required registration of an insurance mediationcompany, mediation agreements need to have been concluded inwriting between the persons who must pursue mediation activi-ties and the persons on whose behalf they will be acting andexpressly lays down the pursuit of their activities, as defined inthe Regulations issued under the 2016 Law and are submitted tothe House of Representatives for approval.6

All insurance mediation companies and individuals must, atthe time of their registration and for as long as they are active inthe provision of mediation services, either hold professional li-ability insurance that covers the entire EU and the EEA for anamount of at least €1,250,.618 per claim and €1,857,927 per an-num for all claims unless the insurance or other similarguarantee has already been provided by an insurance or otherundertaking on behalf of which it is acting or for which the sub-agent is authorized to act, or if the undertaking has fully under-taken the liability for the actions of the subagent or hold anothersimilar civil liability guarantee as to conduct that arises fromprofessional negligence, comparable to the above.7

§ 15:32 Establishing an Insurance Intermediary—CypriotMediation

The exclusive object of the Cypriot mediation company must beto act as one of the four types of mediation, to the exclusion ofany other commercial activities.1 The Superintendent mayexceptionally register a tied insurance adviser where theintermediary business is supplementary to its principal profes-sional activity if:

1. The insurance is complementary to the goods or servicesprovided in the context of its principal activity; and

2. The insurance company on whose account it will act has





tion 367(1).


656

expressly assumed in writing liability for its acts oromissions.2

At least two directors of the company as well as all the naturalpersons exercising insurance mediation services on behalf of thecompany must be registered in accordance with the provisions ofthe 2002 Law as individual agents, brokers, mediators, or advis-ers, as the case may be.3 The indemnity requirements outlinedabove apply to natural persons acting as intermediaries withinCypriot-registered intermediary companies.4

Individuals must be fit and proper5 within the judgment of theSuperintendent6 and capable of pursing intermediation businessby reason of their having adequate general, commercial, andprofessional knowledge and skills, depending on the fields of in-surance which they offer, and hold the qualifications set out inthe relevant Regulations.7 An individual will need the insurancecompany on whose behalf he acts to have expressly assumed inwriting the responsibility for his acts or omissions.8 Individualbrokers must be a director or employee of a broking company tobe registered.9 A person is not considered fit and proper wherehe:

1. Has been convicted of forgery, theft, fraud, embezzlement,usury, profiteering, blackmail, bribery, smuggling, extortionof money on false pretences, murder, manslaughter, rape,offences of moral indecency, or other criminal offences simi-lar to the above;

2. Has been declared bankrupt and has not been discharged;or

3. Has previously held a qualifying managerial position in an


3Insurance and Reinsurance Services and Other Related Issues Law, sec-tion 373(1)(b).







§ 15:32CYPRUS

657

insurance business or other similar financial sector busi-ness, the license for which has been withdrawn for seriousviolation of its obligations, unless he can prove that he orshe did not concur or cooperate in the violation.10

Furthermore, the managers of the company as well as anyperson who, whether directly or indirectly, has a qualifying hold-ing in the company must be:

1. Fit and proper as described above; and2. Suitable for the prudent management of the company.11

A fee is payable with the application for registration of a Cyp-riot legal or natural person.12 For individual agents, mediators,and advisers, the written consent to any projected registration isrequired from the party on whose account they wish to act.13 Ap-plications for the registration of natural persons as tied insur-ance advisers must be filed by the insurance company on whoseaccount the natural person wishes to act, accompanied by a dec-laration by the insurance company that:

1. The conditions of section 372 of the 2016 Law have beenfulfilled; and

2. The insurance company takes full responsibility for the actsor omissions of the individual.14

Applications for the registration of companies wishing to act asmediators or advisers must be accompanied by written consent toany projected registration from the party on whose account theywish to act.15 The Superintendent has three months in which toapprove the application and register the legal or natural person.16

Once they have been registered, Cypriot may mediators takeup and pursue mediation in other member states of the EU or

10Insurance and Reinsurance Services and Other Related Issues Law, sec-tions 371(2) and 44(2)(a)(b).








658

the EEA under the freedom to provide services or the freedom ofestablishment, provided that they have notified theSuperintendent.17 Within one month from the receipt of the rele-vant notification, the Superintendent must forward that notifica-tion to the competent supervisory authority of the host memberstate, if such notification is required.18

§ 15:33 Establishing an Insurance Mediation—Mediationfrom European Union or European EconomicArea Country Other Than Cyprus

The Insurance Companies Control Service of the Ministry ofFinance must maintain a register of persons carrying out orpursuing intermediation businesses:

. . . operating subject to the freedom of establishment or thefreedom to provide services regime concerning . . . legal personswith their place of registration or their central management in amember state of the European Union or of the European EconomicArea, provided that this will serve information purposes only asregards the insured parties or other persons interested in theconclusion of insurance agreements.1

Furthermore, the Superintendent2 must register such entitiesin accordance with section 388 of the 2016 Law.3 Mediatorsregistered in a member state of the EU other than Cyprus maytake up and pursue mediation business in Cyprus as long as:

1. They have registered themselves with the competentsupervisory authority of their home member state, withinthe meaning of their domestic law equivalent of article 3 ofDirective 2002/92/EC;

2. The Superintendent has been notified by that supervisoryauthority of the intermediary’s intention to take up andpursue intermediation business in Cyprus as well as theway in which it will be conducted; and

17Insurance and Reinsurance Services and Other Related Issues Law, sec-tion 370(1)(c).



tion 388.2The public servant in charge of the Insurance Companies Control Service

of the Ministry of Finance.3Insurance and Reinsurance Services and Other Related Issues Law, sec-

tion 370(2).

§ 15:33CYPRUS

659

3. One month has elapsed since the relevant notification of theSuperintendent.4

The 2016 Law does not appear to envisage the Directive nothaving been incorporated into other member states’ domesticlaw, which may be the case. It is unclear whether it is necessaryfor the terms of the Directive to have been incorporated into thelaw of the home member state for such an intermediary to beregistered under section 388(1) of the 2016 Law. If such termsneed to have been incorporated into domestic law, but have notbeen so incorporated, the only alternative would be to establish acompany in Cyprus or a third state.

§ 15:34 Establishing an Insurance Mediation—Mediationfrom Outside the European Union or EuropeanEconomic Area

Third-country intermediary companies may exercise interme-diation business in Cyprus provided that they have beenregistered by the Superintendent.1 All conditions which apply toCypriot companies apply to those of third countries. In addition,a company must be authorized in its home state to carry out com-parable business, and it must continually maintain a representa-tive in Cyprus. The representative must:

1. Be registered in accordance with the provisions of the 2016Law as an insurance agent, broker, advisor, or mediator, asthe case may be;

2. Be authorized to act on account of the third-country com-pany;

3. Direct the business of the branch; and4. Be a person other than the approved auditor or partner or

employee of the branch’s approved auditing firm.2

4Insurance and Reinsurance Services and Other Related Issues Law 389(1).



tion 374(2)(b).


660

V. COMPETITION LAW

§ 15:35 In General

The most important piece of Cypriot competition legislation isthe Protection of Competition Laws of 2008 and 2014.1 The Com-petition Law was introduced as part of the general policy of thegovernment to align Cypriot law with that of the EU. Indeed, themain provisions were transposed from articles 81 and 82(formerly articles 85 and 86) of the Treaty of Rome.

Section 8 of the Competition Law provides for the creation of aCompetition Committee, empowered to punish infringements byinjunctions and fines. All agreements between undertakingswhich have as their object or effect the prevention, restriction, ordistortion of competition within the common market are void abinitio, in particular those which:

1. Directly or indirectly fix purchase or selling prices or anyother trading conditions;

2. Limit or control production, markets, technical development,or investment;

3. Share markets or sources of supply;4. Apply dissimilar conditions to equivalent transactions with

other trading parties, thereby placing them at a competitivedisadvantage; and

5. Make the conclusion of contracts subject to acceptance bythe other parties of supplementary obligations which, bytheir nature or under commercial usage, have no connectionwith the subject of such contracts.2

However, such agreements may be considered valid and legallyenforceable pursuant either to a Regulation or to a decision bythe Competition Committee, provided that the following condi-tions are met, i.e., the agreement:

1. Contributes, while allowing consumers a fair share of theresulting benefit, to improving the production or distribu-tion of goods or promoting technical or economic progress;

2. Does not impose on the undertakings concerned restrictionswhich are not indispensable to the attainment of theseactivities; and

3. Does not afford such undertakings the possibility of eliminat-

[Section 15:35]1Law Number 13(I) of 2008 as amended by Law 41(I) of 2014.2Protection of Competition Law, section 3.

§ 15:35CYPRUS

661

ing competition in respect of a substantial part of theproducts in question.3

Abuse of the dominant position of an undertaking is prohibited.4

Such abuse may consist of:

1. Directly or indirectly imposing unfair purchase or sellingprices or other unfair trading conditions;

2. Limiting production, markets, or technical development tothe prejudice of consumers;

3. Applying dissimilar conditions to equivalent transactionswith other trading parties, thereby placing them at a com-petitive disadvantage; and

4. Making the conclusion of contracts subject to acceptance bythe other parties of supplementary obligations which, bytheir nature or under commercial usage, have no connectionwith the subject of such contracts.

Certain types of conduct do not fall within the provisions of thelaw, however, such as:

1. Agreements which refer to the payments and conditions ofemployment; and

2. Businesses whose task is to administer services of generalfinancial interest or fiscal monopoly, to the extent that theapplication of the Law hinders, legally or factually, thefulfillment of the particular mission which has been assignedto them by the government.5

§ 15:36 In General—Pooling Arrangements

On 3 September 1990, the Cyprus Hire Risks Pool notified theCompetition Committee of an agreement signed with 31 insur-ance companies who offer insurance cover in relation to taxis,buses, and hired motor vehicles. Companies which are membersof the Pool share the risks in predetermined proportions.1

The object of the Pool is to offer insurance cover for vehicles ofpublic use which are considered to be of high risk and for whichthe insurance companies are not in a position to offer adequatecover.

The Cyprus Hire Risks Pool applied for a negative clearance or

3Protection of Competition Law, section 4.4Protection of Competition Law, section 6.5Protection of Competition Law, section 7.

[Section 15:36]1Decision Number 3 of 1991, Official Gazette, 7 June 1991.


662

exemption from the provisions of the Protection of CompetitionLaw. The Competition Committee decided that the Pool is anagreement between undertakings which falls within the scope ofsection 4(1) of the Competition Law. It stated that such an agree-ment between undertakings might prevent, restrict, or distortcompetition, particularly as regards the direct or indirect fixingof any trading conditions.

The Committee also found that the exemptions stated in sec-tion 7 of the Law do not apply. In particular, there is no lawproviding for the establishment of the Pool. It decided that themere fact that the premiums are fixed by the executive branch ofgovernment or the House of Representatives cannot be inter-preted to mean that the establishment of the Pool is based on anagreement or act of the state or is grounded on any special legisla-tive provision. However, the Committee examined the applicationof the Pool for an exemption, and decided that an exemptionshould be granted because the Pool:

1. Provides a fair share of the benefits to consumers andimproves production and promotes economic progress;

2. Does not impose on the undertakings concerned restrictionswhich are not indispensable to the attainment of theseactivities, i.e., the improvement of production and the promo-tion of economic progress; and

3. Does not afford the undertakings concerned the possibilityof eliminating competition in respect of the services inquestion.

VI. TAXATION

§ 15:37 Value-Added Tax

Insurance is exempt from value-added tax.

§ 15:38 Corporation Tax—In General

Companies, other than public corporate bodies, are liable tocorporation tax in Cyprus at the rate of 12.5 per cent of charge-able income.1 Public corporate bodies are subject to corporationtax at the rate of 25 per cent of chargeable income.2

[Section 15:38]1Income Tax Law, Law Number 118(I) 2002, as amended by Law Number

116(I) 2011, section 25.2Income Tax Law, as amended, section 25.

§ 15:38CYPRUS

663

§ 15:39 Corporation Tax—Corporation Tax for Non-LifeInsurers

For insurance undertakings engaged in insurance business inthe General Business Class, the profits or benefits on which taxis payable are calculated by adding together all the grosspremiums, interest, commissions, and other income and deduct-ing any premiums returned to the insured and premiums paid onreinsurance. From the resulting figure, the reserve for unexpiredrisks at the end of the year of assessment is deducted, and thereserve similarly calculated for unexpired risks at the beginningof the year of assessment is added. Finally, expenses and anyother deductions allowed are deducted.1

Where the amount of loss which, if a profit or benefit would betaxable, is such that it cannot be wholly set off against the incomeof the insurance undertaking from other sources for the sameyear of assessment, it will, to the extent to which it is not set off,be carried forward and set off2 against the income of theundertaking for subsequent years.3

§ 15:40 Corporation Tax—Corporation Tax for LifeInsurers

For insurance undertakings engaged in insurance business inthe Life Class, the profits or benefits on which tax is payable arecalculated by adding together all gross premiums and net invest-ment income and deducting any premiums paid on reinsurances,net claims, surrenders, and expenses. From the resulting figure,the reserve for liabilities in respect of the long-term business inCyprus at the end of the year of assessment is deducted, and thereserve for liabilities at the start of the year of assessment yearis added.1

Where no tax is due, or the tax payable on the profits or benefitsfrom long-term insurance business does not exceed 1.5 per cent ofthe gross premiums, excluding contributions to any approvedpension or provident fund or any other fund which the insuranceundertaking manages for the benefit of its members, theundertaking must pay the difference by way of income tax

[Section 15:39]1Income Tax Law, as amended, section 16(1).2Income Tax Law, as amended, section 13.3Income Tax Law, as amended, section 16(2).

[Section 15:40]1Income Tax Law, as amended, section 17(1).


664

prepayment.2 Income of the undertaking from other sourcesincludes income from the management of any pension, provident,or other fund.3

Where the amount of loss which, if a profit or benefit would betaxable, is such that it cannot be wholly set off against the incomeof the insurance undertaking from other sources for the sameyear of assessment, it will, to the extent to which it is not set off,be carried forward and set off4 against the income of the insur-ance undertaking for subsequent years.5

VII. CONCLUSION

§ 15:41 In general

The entry of Cyprus into the EU has meant that the regulationof the sector has become more sophisticated than ever. While thishas increased costs in the short term, the consumer now enjoysfar greater peace of mind.

Cyprus has become an ideal base for insurance interests basedoutside the EU, looking to tap into the opportunities offered bythe largest trading bloc in the world. The Cypriot insuranceregime constitutes a credible and effective framework, fully inline with EU standards. Furthermore, the high level of profes-sional services inspires confidence, and the low-taxation environ-ment supports these subjective views with clear objective benefits.

2Income Tax Law, as amended, section 17(2).3Income Tax Law, as amended, section 17(3).4Income Tax Law, as amended, section 13.5Income Tax Law, as amended, section 17(4).

§ 15:41CYPRUS

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