CAR Insurance premiums are set to rise by an average of 20 per cent, according to the Association of Insurance Companies.
Speaking on behalf of the Association, Philos Zachariades said the increase was considered necessary following a rise in the number of claims made by motorists, both Cypriots and foreigners on the island. The increase is significant, he said. “There is also an increased risk from natural catastrophes.”
A spokeswoman at one of the country’s biggest insurance companies, Commercial Union, yesterday told the Cyprus Mail that, “each company decides and charges their own premiums. Since liberalisation of the car insurance market in July 2001, individual companies are free to charge whatever they want for compulsory insurance. Before liberalisation, rates were fixed by Parliament.
When asked why premiums were on the increase, the woman, who wished to remain anonymous, explained that, “It’s not just a matter of the number of claims but it’s also the increased cost of claims, which is a factor. We also look at court awards in foreign countries when fixing premiums. In Cyprus, premiums are still lower than in other EU countries, whereas court awards are at similar levels.”
She went on to say that other factors must be taken into consideration. “Spare parts are more expensive in Cyprus than in many other countries and we also have an interest rate of 8 per cent on court awarded amounts and legal fees. In other countries they either have a much lower rate or don’t have a rate at all. In fact, Parliament is currently discussing this issue.”
Questioned on what Zachariades meant when he linked higher premiums to an increased risk from natural catastrophes, the spokeswoman said that, “all insurance companies here on the island are re-insured with other international re-insurance companies. A natural catastrophe impacting on those companies, even if not happening in Cyprus, will have an effect. For example, we felt the impact from the September 11 terrorist attacks in the United States in terms of costs charged to us by re-insurers. The Cyprus market is not isolated in their eyes.”
