Insurance law in Cyprus is governed, by several legislations which came under the microscope of the Legislator or underwent important amendments following an EU legislator's initiative over the past couple of years.
Most importantly, the Law of Insurance and Reinsurance business and other related issues Law no. 38(Ι) 2016 underwent important amendments in order to be in line with the Directive on Insurance Distribution ('IDD') (Directive (EU) 2016/97 of the European Parliament and of the Council of 20 January 2016 on insurance distribution). In summary, the amendments deal with the EU policy on the prevention of money laundering, any Brexit implications, any platforms of co-operation provided by the IDD, and reporting duties to the competent authorities. This initiative corresponds to the EU's Action Plan (the "Plan"). Specifically, the Plan aims to incorporate sustainability when providing financial advice and to clarify the integration of sustainability in fiduciary duties. Thus, the EU legislator proceed with amendments for the purpose of specifying product oversight and governance requirements for insurance undertakings and insurance distributors. Hence, the insurance intermediaries and insurance undertakings are now obliged amongst others , to obtain necessary information about the customers' knowledge and experience in the investment field, their financial situation, and their objectives to enable the insurance intermediaries and insurance undertakings to do a suitability assessment, sectors which come under the sustainability umbrella.
Apart from the above, new civil procedure rules ('CPR') underwent radical changes , the final version of which , has now been issued and it is expected to be implemented within the present year . The said rules include special provisions for insurance claims and the procedure that must be followed by the claimant and insurers at the pre-trail stage based on the criteria set up by the Pre-Action Protocol for Personal Injury Claims in Road Traffic Accidents ('The RTA Bodily injuries Claims Protocol'). Undoubtedly, the new rules provide legal certainty and better understanding of the claim as well as better case management of the claim if it finally goes into litigation.
The spread of Covid-19 had a negative impact on Cyprus economy. In terms of insurance business, it is commonly accepted that many companies that had business interruption insurance contracts in force have attempted to invoke the commonly used force-majeure clauses, so that they can be compensated for the losses caused from the Covid-19 outbreak.
Businesses in Cyprus were not an exception; hence as we are aware, at least one action has been filed by a company that administers hotels and restaurants against their insurer, with which it had signed business insurance policies, namely AXM HOLDINGS LTD v TRUST INTERNATIONAL INSURANCE COMPANY (CYPRUS) LTD, Case No.: 17/2021, which commenced on 21.01.2021. Briefly, the company invoked terms in the insurance policy that provide cover for denial of access (resulting from public authority intervention that prevented or hindered access to use or use of the insured premises) and terms which provide cover for business interruption losses resulting from the occurrence of a notifiable disease at the insured premises. It is expected that at the stage of the hearing of the action the company will refer to the various interpretations and directions given by the UK Supreme Court in its judgment in the test case brought by the Financial Conduct Authority, which followed an appeal from High Court Judgment (Financial Conduct Authority v Arch Insurance (UK) Ltd  UKSC 1, 15 January 2021). It is considered that the latter case is favorable to policyholders. However, the Cyprus courts have not dealt with this debate yet.
To conclude, the Cyprus insurance legislation came under the microscope of the legislator. What can be concluded is that Cyprus legislative and judicial systems have shown to be adaptive to the new challenges in the past years and it remains to be seen how the Cyprus courts will handle the debate regarding the coverage of business interruption losses resulting from the pandemic.
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