Insurance Directive hit to public minimal

Recent comments by MPs warning the public that they could face a huge bill if Cyprus adopts the EC Directive on minimum motor insurance coverage has been described as untrue by the leading insurance web site, www.asfalizomenos.com and as yet further proof that MPs are only concerned with grabbing news headlines and public attention.

Insurance expert Manolis Kyriacou told asfalizomenos.com that the so-called hit to the public would be on average 10-20% in increased fees, or CYP 5-10 per contract assuming that all insurance companies hike their fees at the same time.

“Nothing is yet clear since the insurance companies have not decided the level of the increase and perhaps due to the competition in the market, such increases may not be materialised,” Kyriacou told asfalizomenos.com.

Deputies had warned that insurance costs were expected to be subject to a drastic increase based on an EU Directive on compulsory third party liability motor insurance that must be implemented by June 11.
Presently, insurance companies cover a minimum CYP 60,000 (EUR 103,000) for material damages in the event of an accident. Based on the directive, this amount will increase to CYP 600,000 or about 1 mln euros.

In addition, the existing law that sees insurance companies cover up to CYP 2 mln (EUR 2.06 mln) in compensation for each person injured during a car accident is set to be altered as well. This amount will increase to a minimum of 30 mln euros to cover all injuries suffered in each accident.

As from June 11, citizens will have the right to take direct legal action against insurance companies, something that could see the legal expenses of insurance companies rise.
However, the prospect of ratification of a bill set to change the interest rate paid by insurance companies for court procedures could balance out the suspected increase in premiums. The interest rate in this case has not been changed from 8%, despite the liberalisation of interest rates.