Amid a worsening climate crisis and increasingly frequent extreme weather events, Cyprus continues to exhibit alarmingly low levels of residential property insurance. In fact, only about 25% of rural homes on the island are insured against natural disasters. Property owners, especially those in mountainous regions, mistakenly believe that their homes are not at risk. However, reality proves otherwise.
Major fires in Limassol and Larnaca, devastating floods in Chloraka and Afiou, and seismic activity along the Cyprus arc demonstrate that no part of the island is completely safe. Nevertheless, most homeowners are not taking active steps to protect their property.
Insufficient insurance: dangerous gaps and legal passivity
The problem is exacerbated by the fact that, even in cities, the level of insurance does not exceed 40%. Most policies only cover the common parts of buildings, leaving apartment structures and private premises without adequate protection. Management committees of apartment buildings are required to insure the building against fire, lightning, and earthquakes. In practice, however, they either ignore this obligation or limit themselves to minimum coverage amounts.
Existing insurance programs often exclude the cost of construction debris removal, engineering services, and third-party liability. In the event of destruction or damage caused by natural disasters, owners must cover significant losses themselves, especially if load-bearing walls or partitions are affected.
Why don't Cypriots insure their homes?
One reason for the low level of insurance is the lack of financial obligation. Many properties in Cyprus are purchased without a mortgage or are inherited, eliminating the need for insurance from banks. Owners perceive the absence of credit risk as an absence of need for insurance. This creates a false sense of security and makes them vulnerable to sudden disasters.
Additionally, the legislation does not include a mechanism for compulsory insurance at the individual owner level. Only with a 50% majority vote can owners decide to extend insurance coverage to include risks such as floods, hurricanes, or landslides.
What can Cyprus learn from Europe?
Countries with sustainable climate policies and high insurance rates, such as France, the Netherlands, and Spain, have collective insurance programs. These programs enable rapid compensation payments after disasters, reducing the burden on government budgets and accelerating the recovery of affected areas.
In many regions of Europe, neighborhood or municipal insurance mechanisms are being introduced with state support and tax incentives. These programs help create systemic resilience, protecting every property—whether an apartment, a house, or a plot of land—against climate and natural risks.
The Future of Insurance in Cyprus: The Path to Sustainability
It is crucial for Cyprus to transition from a fragmented, reactive approach to a strategic, comprehensive insurance policy. Introducing collective insurance solutions, mandatory standards, and awareness campaigns for homeowners could significantly increase the population's level of protection. In light of the growing frequency and intensity of natural disasters, insurance must evolve from an option to a way of life on the island.