Interview of Miltiades Miltiadou to Cyprus Insurance News

Translated from original Greek version of the interview.

1. To begin with, tell us a few words about your own path in the Insurance Industry. What made you love this industry and dedicate yourself to it for the last 25 years?

My move from the public sector to the insurance industry took place at the ripe age of 47, which is why I say it is never too late. In order to be able to respond to my new duties as general manager of an insurance company (AIG’s branch in Cyprus), I had to read wordings of insurance policies, study insurance literature in depth and attend training seminars. From the early stages, I discovered the magic of General Insurance, which is multifaceted and offers a broad understanding of both society and the market. It combines financial data, product diversity, data analysis, risk management, customer service and social impact.

2. How do you see the evolution of the Insurance Industry from when you started your career to today? What differences do you see?

Over the last 25 years, General Insurance has undergone a significant transformation. Insurance companies have converted paper-based procedures to electronic ones, achieving faster policy issuance, faster claims processing and generally faster customer service. In the distribution channels of personal insurance, direct models have developed, reducing dependence on traditional insurance agents. The insurance industry has been forced to comply with new regulatory frameworks such as Solvency II and the General Data Protection Regulation. At the same time, we have seen the development of innovative products, such as directors and officers liability insurance and cyber insurance.

These changes reflect a shift from traditional product-centric models to more customer-centric, technology-driven approaches, adapted to new risks and opportunities in a rapidly evolving world.

3. What is the importance of vocational education and training in the insurance sector?

Vocational education and training in the insurance sector equips professionals with the knowledge, skills and competencies required to navigate the complexity of insurance, deliver value to customers and ensure regulatory compliance.

Organizations that prioritize vocational education often enjoy a stronger reputation and greater credibility among customers and partners. Vocational education and training in the insurance sector is not only about enhancing individual expertise. It also leads to organizational success, promotes ethical standards and ensures better service delivery, ultimately benefiting both professionals and customers.

4. You have been one of the key lecturers of the Cyprus Insurance Institute for years. How do you see the Institute contributing to the insurance industry and how has its work upgraded the industry in recent years?

Traditionally, the training of insurance companies’ and intermediaries’ personnel has consisted of informal on-the-job training or ?product? seminars that are limited to reading the coverages and exclusions of specific insurance policies. Such training alone is incomplete and can result in partial knowledge and/or misconceptions.

The Cyprus Insurance Institute offers systematic training that forms the foundation for anyone wishing to develop professionally.

It organizes seminars for technical knowledge and skills at an advanced level that are aimed at professionals who want to expand their knowledge. Professionals who attend the technical seminars have a thorough understanding of insurance products and can accurately assess and manage insurable risks, customize insurance policies, provide sound and informed advice to clients, and manage claims correctly and fairly. Additionally, they stay up to date on legal and regulatory requirements, reducing the risk of non-compliance.

With the ever-increasing trend of direct personal insurance, commercial insurance seminars are essential for insurance agents who want to continue to be useful and offer high-quality services to their business clients.

5. In your opinion, what are the reasons why a portion of the consumer public does not understand or even questions the value of insurance?

In summary, I could mention the following reasons for misunderstanding or questioning the value of insurance:

·????? Its intangible nature. Insurance is a promise for which customers pay without experiencing immediate tangible benefits, unless they file a claim.

·????? Many feel disappointed when they “don’t get their money back” if they do not file a claim and see insurance as a waste rather than a transfer of their risks to an insurance company that allows them to sleep peacefully at night.

·????? Customers may not understand the insurance terminology of modern lengthy insurance policies and perpetuate the myth that the ?fine print? allows insurance companies to avoid their obligations.

·????? There is a distrust of insurance companies because stories of claims rejection or underpayments are spread, while customers expect insurance to fully cover all their losses without exception.

6. How do you see the impact of technology and digitalization on the insurance industry in recent years and today? What are the challenges and opportunities that arise for the future?

The insurance industry has been undergoing a significant digital transformation in recent years. Innovations such as artificial intelligence, machine learning, IoT (Internet of Things) and blockchain are revolutionizing risk assessment, customer engagement and claims processing.

However, the use of advanced technology comes with risks. Bad chat bots, intended to support customers with ease and efficiency, are replacing genuine customer service with the risk of leaving customers frustrated, less educated and more in the dark. Complex algorithms in the underwriting process make it nearly impossible for customers to understand their own risks or how their premiums are calculated. Machine learning algorithms, designed to streamline workflow, sometimes remove human judgment from important decisions and leave both executives and customers disconnected by not taking into account the individuality of each person.

Some of the challenges the Cypriot insurance market will face are the integration of outdated IT systems with modern technologies, the reliance on technology service providers, and the lack of professionals specialized in artificial intelligence, data science, and cybersecurity.

The difficulty of the Cypriot insurance market adapting to technological developments is evident from the weaknesses of the Cyprus Information Centre, which does not offer reliable information, since it is not connected in real time to the systems of insurance companies and does not include the details of cars insured with a general description under motor insurance policies.

Another example is the failure for many years to create a database to combat insurance fraud. Please note that in the United Kingdom three such bases operate (CUE, MIAFTR, IFR).

7. What do you consider to be the biggest challenges facing the insurance industry in the immediate and long term?

The insurance sector in general is expected to face many challenges due to changes in technology, climate change (which implies an increase in the cost of reinsurance of natural risks), customer expectations (especially of the new generation), the regulatory environment and global trends.

Some specific issues that need immediate attention are:

·????? The inability to attract talent. Insurance companies and intermediaries should treat their staff as an investment and offer them a satisfactory remuneration package and professional training opportunities on a regular basis.

·????? The underinsurance of buildings. Coordinated efforts should be made to update the insured amounts due to the increasing trend in the cost of building materials and labor.

·????? The pricing of car insurance premiums. It should be reviewed due to the increase in the cost of repairs, social inflation and the prolonged loss-making course of the motor vehicle industry.

8. How is the legislative work carried out in relation to the insurance industry evaluated?

Over the last ten years, through my seminars and articles, I have strongly expressed my disappointment with insurance legislation.

In the field of insurance contracts, Cyprus does not have a specific legislation and thus we continue to apply the insurance principles of common law that were formed in the 19th century. In the United Kingdom, they saw the anachronistic lopsided regulations and amended them through legislative intervention. For example, they amended the principle of absolute good faith for the benefit of consumers and banned warranties allowing only conditions precedent to liability.

In the field of intermediation, Cyprus has unnecessary categories of insurance intermediaries. In my opinion, there should be only two categories: agents and brokers. If one reads the law carefully, one will discover that ?insurance advisors? are not allowed to advise and in fact are not allowed to perform any duties of distribution of insurance products. They are only allowed to present insurance products and collect premiums, activities that do not constitute distribution of insurance products according to the definition of the law.

The law on compulsory motor vehicle liability insurance is a poorly written mosaic that needs to be repealed and drafted from scratch. For the time being it offers food for thought as well as for articles and training seminars.

The law on compulsory employers' liability insurance needs various amendments, such as a higher coverage limit, expansion of the definition of occupational diseases, prohibition of exceptions, deletion of unenforceable restrictions.

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