Cyprus & World News

INSURANCE: Olympic's 200,000 drivers in Cyprus and Bulgaria without cover

25 August, 2018

The closure of Cyprus-based Olympic Insurance has left some 200,000 motorists in Bulgaria and 10,000 in Cyprus without insurance cover, with compensations being calculated between EUR 20 mln and 35 mln. Compensations are to be paid out by the Cyprus Motor Insurers’ Fund set up for cases when insurance companies close or declare bankruptcy, and is financed by a 5% levy on Cypriot drivers’ insurance policies.

However, questions are raised on whether a further raise on the cap will be enforced as it is calculated that to cover compensations towards Bulgarian drivers cannot be covered by money collected by the existing 600,000 insurance policies in Cyprus. The rate of the cap on vehicle insurances paid to the Fund is determined periodically by the Finance Minister.

Sources at the Cyprus Insurance Commissioner’s office, headed by Victoria Natar, said that rumours surrounding a possible increase on the cap are “entirely unfounded”.

The company, whose winding up was petitioned at the court on August 10, had its license stripped over concerns about its solvency and its capability to cover contracts in Cyprus.

The Insurance Commissioner, in a written announcement to the press, recorded the actions taken by limiting the activities of the company last May, the objection submitted by the company and its rejection by the General Director of the Ministry of Finance, which led to the Commissioner's decision on  August 10 to appoint a temporary administrator and refer the matter to the court for the appointment of a permanent administrator. The decision was published in the Official Gazzette on August 17, the date on which the company's insurance policies were canceled.

The liquidation order of Olympic Insurance, which resulted from its failure to satisfy capital requirements, has raised several questions over how the company’s demise came about and the role of authorities in both Cyprus and Bulgaria.

Phileleftheros daily reported that evidence suggests that Olympic's financial insolvency arose after the company’s owner, Luxembourg’s Hispakol S.A, bought insurance companies in Latin America worth more than EUR 150 mln in 2017.

The Cyprus Mail also reported that Hispakol S.A. announced in April the acquisition of an online education service provider from Spain’s UGT for EUR 17 mln. According to the Mail, the company informed policyholders in Cyprus last week of this development by text message and provided a contact number. The number was unreachable, an Olympic customer told the Cyprus Mail.

According to press reports from Bulgaria, the Cypriot Ambassador in Sophia, Stavros Avgoustides, promised Bulgaria's Foreign Minister that he would arrange a meeting with Cypriot Insurance Commissioner Victoria Natar, whom the Bulgarian authorities said they had tried contacted since August 7.

Meanwhile, Bulgaria’s head of insurance supervision resigned on Tuesday, bowing to pressure from politicians to quit after Olympic Insurance was stripped of its operating license from Cypriot authorities.

Ralitsa Agayn, deputy chair of Bulgaria’s Financial Supervision Commission (KFN), submitted her resignation just before Bulgarian legislators interrupted their holidays for an extraordinary parliamentary session on the liquidation of Olympic Insurance Company Ltd and its impact on Bulgarians.

Bulgaria's Attorney General Sotir Tsatsarov, had ordered on August 20 a probe of actions taken by Ralitsa Agayn. According to Bulgarian press reports, the commissioner said last Friday that her office was not responsible for the bankruptcy of Olympic, which operated under the supervision of Natar in Cyprus, on the basis of European legislation allowing EU companies to operate in other Member States. According to Agayn, the Bulgarian insurers' fund is not in a position to compensate the victims of Olympic, who will have to seek treatment from Cyprus when the bankruptcy procedure is completed.