Cyprus Mail

Shady insurance policies probed by MPs 

Insurance companies have got into the business of trading in car parts, adversely affecting competition among auto repair shops, while also not paying VAT on insurance payouts for accidents, MPs heard on Tuesday. 

The matter was discussed at the House commerce committee following complaints lodged by the association representing auto repair shops and auto paint shops. 

The association claims that when a vehicle gets damaged in an accident and needs spare parts, insurance companies interfere with the selection and procurement of the spare parts, setting the minimum market price regardless of the actual price of the items. 

They also say that insurance companies hire internal appraisers, who are not certified. These appraisers, working for an insurance company, cannot be relied on to be impartial. 

The association additionally alleged that insurance companies are exempt from VAT. That is, they can make payouts based on an appraisal and without an invoice. The companies allegedly take advantage of this, as do garages that carry out undeclared work. 

According to the association, insurance companies are not permitted to conduct any business other than insurance – they should not be involved in the procurement of car parts. They said they’ve filed a number of complaints to the Superintendent of Insurance, but have yet to get a response. 

In parliament, a representative of the Insurance Association flatly rejected the accusations, insisting there exists no prohibition on insurance companies buying materials intended for repairing vehicles. 

Committee chair Kyriacos Hadjiyiannis (Disy) called on the relevant state services to look into the issue. 

“Today we established that some problems exist where competition is distorted,” he said in remarks later. 

“The victim here is the consumer, the driver who gets involved in an accident.” 

The MP said there appears to be “a gap in the interpretation of the law” regarding whether an insurance company may trade in car parts. 

He said lawmakers will seek a legal opinion from the auditor-general, and if necessary they would draw up new legislation regulating the matter. 

For her part, an official with the Commission for the Protection of Competition (ministry of commerce) stated that they are currently investigating one such complaint. 

Akel MP Andreas Pashiourtidis said they know of a complaint filed back in 2021 alleging that an insurer was also the owner of a company trading in spare parts. 

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