The outlook for Cyprus's financial markets - especially the banking system has remained negative and unchanged since May 2009, according to MOODY's Investors Service, ansamed.info informed. The financial crisis in Cyprus triggered a deep and prolonged economic recession that will further strain the already highly stressed operating environment. "In this context the outlook reflects the formidable challenges the banks are facing, namely acute asset-quality deterioration, continued concerns over their solvency, and intense funding and liquidity pressures. The banks will continue to operate in a highly-stressed environment, with MOODY's expecting a 12% contraction of GDP in 2013 and 6.4% in 2014."

With 28 insurance companies operating on the island, Cyprus' insurance sector was considered very attractive and highly concentrated to the financial crisis. The "banking background" of the local market - the largest insurance companies in Cyprus being subsidiaries or affiliates of banks - (EUROLIFE, CNP CYPRIALIFE - former LAIKI and UNIVERSAL LIFE on the life insurance segment, or CNP Asfalistiki and General Insurance of Cyprus, on the non-life insurance line) - are the main players on the market, but reported some of the largest negative dynamics.

According to the report published by the Insurance Association of Cyprus, the crisis was felt across all lines of insurance (except fire insurance). Quantitatively, in 1H2013 the largest decrease in GWP was recorded in life insurance - from EUR 187 million to EUR 169 million (or 9.7% less y-o-y), and in the motor insurance class - from EUR 93 million to EUR 86 million.

In case of the life insurance, the main reasons are the development of surrender and redemption phenomena, while in the motor segment, the number of people driving without motor insurance "is on the rise due to the crisis, and has been on the uptrend for two years. In the first six months of this year 1,428 drivers without insurance were charged," traffic police chief, Demetris DEMETRIOU said, quoted by Cyprus-Mail.com.

Read more in the forthcoming edition of XPRIMM Insurance Report - CEE, Russia&CIS, SE 1H2013, to be released on October 20th, on the occasion of the XPRIMM Reception in Baden-Baden.

Access www.xprimm.com and download the 1H2013 Cyprus insurance market statistics.

• Market portfolio (GWP/Growth rates)
• Life and non-life market rankings (GWP/Market shares/Growth rates)