MOTOR INSURERS’ FUND OR MIF
Establishment of the Bureau
Following the introduction of Compulsory Motor Third Party Insurance in Cyprus in 1957, many owners or drivers of motor vehicles for various reasons and contrary to the relative Law, continued to use the roads without having a policy of insurance in force. As a result of this situation, their victims remained without compensation and this created a social problem that the Insurance Companies’ Law of 1967, which came into force in 1969, intended to solve through the introduction of a specific provision. Section 55 of the said Law, gave to the Minister of Finance the power to set up, if he wished, a special Fund which would cover such victims. Consequently, the then Minister of Finance, having as a model the Motor Insurers’ Bureau already operating in the U.K, authorized Motor Insurers to set up and operate such a Fund. So, on the 1st February 1969, the Motor Insurers’ Fund was registered by the Registrar of Companies as a company limited by guarantee, just like its U.K model and has as its members all Motor Insurers operating in Cyprus.
Scope of the Fund
The Motor Insurers’ Fund (M.I.F) is bound to the Minister of Finance by force of an Agreement (known as Principal Agreement) to pay under certain conditions, compensation to third parties in relation to the liability of:
(a) Uninsured drivers
(b) Unknown drivers, and
(c) Drivers insured with an insolvent Insurance Company.
Sections 27 to 35 of the Motor (Third Party Liability Insurance) Law (Law 96(I) 2000) are relevant.
The Principal Agreement and the Legislation provide that the Motor Insurers’ Fund will also function as the “Cyprus International Insurance Bureau” as a result of the accession of Cyprus to the Green Card System as from 1st June 1996. As an “International Insurance Bureau” the Fund guarantees the liabilities of its member Companies and generally of the owners of the vehicles with Cypriot registration numbers as regards accidents occurring in Countries which are members of the Green Card System.
In addition, the Fund guarantees in relation to any vehicle that bears registration plates of the Republic of Cyprus that circulates without insurance in any country member of the “Multilateral Agreement”, that any victim will be compensated by the “Cyprus International Insurance Bureau”.
In parallel with the Principal Agreement, there also exists the so called “Internal Agreement” between the Fund and its members. The Internal Agreement provides, among other things, the method of handling claims, the undertaking by Insurance Companies of certain liabilities which are excluded from their policies, the method of settlement of disputes and the method of collecting the premium surcharge.
The Motor Insurers’ Fund is administered by a Board of Directors consisting of 10 persons ie the Chairman, the Deputy Chairman and 8 members. The election of the Directors is carried out annually during the Annual General Meeting. The Chairman and his deputy are elected by the Directors during their first meeting.
The day-to-day work of the Fund is carried out by the Secretariat, consisting of the Secretary/Manager and other officers employed on a full time basis.
Fund’s Source of Income
In accordance with paragraph 3 of the Memorandum of the Principal Agreement with the Minister of Finance, the Fund collects a premium surcharge from all policy holders (through their Insurers) which is determined in accordance with the from-time-to-time directions of the Minister of Finance, issued after consultations with the Fund and based on the Fund’s needs.
The percentage of the premium surcharge as from 1st January 2001 until to-day has been fixed at 5%. (until 31/12/2000 was 3%).
The amounts collected by Insurance Companies are remitted to the Fund “within two calendar months from the end of each quarter”. (Internal Agreement, Paragraph 10).
Members of the Fund
The members of the Fund until 30th September 2006 were 23 Insurance Companies, including one U.K. Company operating in Cyprus under “Freedom of Services”.
Fund’s operations and amounts paid
From the date of its establishment until the 31st December 2005, the Fund paid a total amount of approximately 23 million Cyprus pounds as compensation, the £8 million of which concerned payments to victims of insurers under liquidation.
INSURANCE COMPANIES WRITING MOTOR THIRD PARTY LIABILITY INSURANCE BUSINESS IN CYPRUS
ALLIANZ HELLAS INSURANCE CO. S.A.
ALPHA INSURANCE LTD
AIG INSURANCE LTD
ALTIUS INSURACNE CO LTD
COMMERCIAL GENERAL ASS. LTD
COSMOS INSURANCE CO LTD
ETHNIKI GENERAL INSUR. (CYPRUS)
EUROSURE INSURANCE CO LTD
GAN DIRECT INSURANCE LTD
GENERAL INSURANCE OF CYPRUS
HYDRA INSURANCE CO LTD
KENTRIKI INSURANCE CO LTD
CNP ASFALISTIKI LIMITED
TRUST INTERNAT. INSUR. COMPANY (CYPRUS) LTD
MINERVA INSURANCE CO LTD
OLYMPIC INSURANCE CO LTD
PANCYPRIAN INSURANCE LTD
PROGRESSIVE INSURANCE CO LTD
ROYAL CROWN INSURANCE CO LTD
YDROGIOS INSURANCE CO LTD
TRADWISE INSURANCE COMPANY
CATLIN INSURANCE COMPANY(U.K.) LTD
In Cyprus operates also the Cyprus Hire and Rejected Risks Pool, which Insures, on account of all the above Insurance Companies, public service vehicles (taxis, omnibuses) as well as drivers who are not considered as “acceptable risks” by Insurance Companies.