This paper examines the Insurance Regulation and Supervision for Cyprus’s Financial Sector Assessment Program. The domestic nonlife market is dominated by motor insurance which accounted for 58 percent of net premiums. All Cypriot business is reinsured with nondomiciled reinsurers. Health insurance is regulated as nonlife business when written as add-ons to accident and sickness or as life business when written with life policies. A number of professional bodies and self-regulatory industry associations complement the regulatory regime for the insurance industry.
The Compliance of the Basel Core Principles welcomes the assessors’ recognition of the overall quality and effectiveness of Cyprus’s banking regulatory and supervisory framework in place, and the resulting high degree of compliance with the Basel Core Principles. Regulation has to be defined to set a frame in which insurance undertakings can operate. Clear objectives and measures should be defined for the Superintendent of Insurance. The International Organization of Securities Commissions Principles was assessed in accordance with the criteria in the Guidance Note.
The report summarizes the assessment of Financial Sector Supervision and Regulation on Reports on the Observance of Standards and Codes (ROSC) on banking supervision, insurance supervision, and securities regulation of Cyprus. The report assesses that the financial system in Cyprus is in a process of reform generated by liberalization and regulation owing to accession to the European Union. The paper analyzes competency in the banking sector and technical supervisory rules, and assesses its strengths and vulnerabilities in the implementation of financial standards mainly in cross-border cooperation, information exchange, and consolidated supervision.