Cyprus Amends Insurance Rules For Solvency II
by Lorys Charalambous, Lowtax.net, Cyprus
23 October, 2015
A new draft law has been passed by Cyprus's Council of Ministers to bring the territory's framework into line with the requirements of the EU's Solvency II Directive on insurance.
Solvency II, which is due to come into effect on January 1, 2016, will introduce a new regulatory framework for all European insurance and reinsurance companies. This will be based around three "pillars":
- Pillar 1 sets out quantitative requirements, including the rules to value assets and liabilities (in particular, technical provisions), to calculate capital requirements, and to identify eligible own funds to cover those requirements;
- Pillar 2 sets out requirements for risk management, governance, as well as the details of the supervisory process with competent authorities. This will ensure that the regulatory framework is combined with each undertaking's own risk-management system and informs business decisions; and
- Pillar 3 addresses transparency, reporting to supervisory authorities and disclosure to the public.
The Cypriot Finance Minister, Harris Georgiades, said: "We consider the insurance sector as a particularly important sector for our economy, with further growth prospects and, without doubt, the introduction of this new much more detailed and reliable framework for the operation and supervision will help."
Georgiades also announced the passage of another bill to enable financial leasing.
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