Bulgaria said that Cyprus should pick up the costs of 28.5 million euros ($32.96 million) in claims by Bulgarian customers of Cyprus’ Olympic Insurance, which went bust and its offices in both countries liquidated.
There were some 9,500 unpaid claims in Bulgaria and 2,500 in Cyprus of some 15 million euros ($17.35 million) the Chinese news agency Xinhua said in a report on the issue, with Cypriot Financial Ombudsman Pavlos Ioannou saying he is considering asking his government to propose legislation to help the customers.
Olympic Insurance was based in Cyprus but most of its business was done in Bulgaria, where it had 9 percent of the market with 200,000 insured clients against damage to third parties who were left without coverage and had to purchase new policies from other companies.
The Cyprus Mail published documents it said proved that the failure of the company could have been avoided if Cyprus’ supervisor of insurance companies was more diligent and spotted warnings about its owners shadowy activities with no report of where the monies paid by customers had gone.
The owner of Olympic’s Luxembourg based parent company, a Spanish citizen, was named in a June 2015 statement issued by Spain’s Comision Nacional del Mercado de Valores (CNMV), which supervises the country’s financial markets and warned investors his New York Securities Bank based in the Comoros Islands was not authorized to provide services detailed in Spain’s Securities Market Act, which include insurance services.
Yet, seven months later the Cypriot supervisor failed to heed the warning and he was allowed to buy all shares of Olympic Insurance, totaling almost 8 million, from its previous owner and become its new owner and manager, in January 2016.
An audit could not verify any of several claims about the company’s finances, including Brazilian sovereign bonds, immovable property, receivables and cash deposits in a shadowy bank in the Comoros islands which appeared to be his personal account.
Cypriot Auditor General Odysseas Michaelides said via Twitter that his office had spotted Olympic’s shortcomings when it carried out its audit for 2014 but didn’t explain why, if so, it was allowed to keep operating.
An official of the Cypriot Motor Insurance Fund, which has been set up by insurance companies to underwrite claims on insurance companies in case of insolvency, said the Fund may pay claims by Bulgarian clients of the company.