Cyprus goes all out in the maritime insurance game

Cyprus has been a serious contender in the maritime and shipping industry, but recently it emerged as one of few unbeatable alternatives for big foreign P&I clubs looking to set shop home away from home.

Earlier this summer, British ship insurer London P&I Club announced it was setting up a new subsidiary in Cyprus to ensure continued access to trade in the European Union in case Britain loses single market access.

London Club is one of thirteen major global P&I insurers and Europe accounts for over 60 percent of the group’s activities with multimillion portfolios.

Big companies sounding Cyprus out

There are also other big insurers who are seriously looking into Cyprus, in addition to Greek companies and another British firm that already set shop in Limassol in March.

According to Kathimerini Cyprus, the country has managed to attract three of the thirteen major P&I Clubs, while companies from Asia and Europe, including Germany, are reportedly sounding out the island for a possible pick.

Shipping Deputy Minister Natasa Pilides, the first ever to hold the position on the island, gives credit to experience coupled with low cost overall as main factors.

Pelides, who spoke with Kathimerini earlier this week, said the Republic of Cyprus offers the lowest cost when it comes to long-term service while also offering cheaper rates when compared to those in non-EU countries.

A healthier bottom line for companies

The 37-year-old newly-appointed deputy minister believes the overall lower cost, combined with staffing expenditure and making a brand on the island, would ultimately cost less in Cyprus than Hong Kong and Singapore.

Critics and local pundits have questioned whether Cyprus had a serious plan to attract long-term business, citing external factors that usually play a key role in short-term ventures, such as Russian tourism.

Russian tourists, who were vacationing on the island in droves up until last year, saw their numbers drop considerably due to cheaper holidays in Turkey.

But officials dismiss the notion that the goings-on in the shipping industry depend only on external factors, arguing there is a blueprint in place to attract foreign shipping companies to the island.

Pelides made the case for Cyprus in a Bloomberg interview back in May.

“While a small country, we are already a major player in international maritime affairs, but we want to be even bigger and better,” she said.

Local industry officials have been mounting efforts to showcase the advantages of Cyprus in conjunction with Brexit prospects, but also highlighting cost, services, and taxation as fiercely competitive factors in the game.

Just in the second half of 2017, industry revenue from ship management in Cyprus came to €476 million, recording a 4% increase compared to the same period in 2016.

Cyprus has the third largest fleet of ships flying the Republic of Cyprus flag in all of Europe, while it is eleventh globally.

The GDP contribution of the maritime industry in Cyprus is estimated to be around 7%, although this figure does not include many investors in the shipping industry who may live and work on the island.

Cyprus has recently privatised its ports following an intense and prolonged conflict with unions, with the government saying privatisation has opened up new opportunities that could draw in foreign companies to set shop on the island.