NICOSIA, Aug. 23 (Xinhua) -- EU member-states Bulgaria and Cyprus are at loggerheads over the failure of an insurance company based on the eastern Mediterranean island and on who is to foot the bill for insurance claims totaling 43.5 million euros, Cypriot media reported on Thursday.
Olympic Insurance, which was put in liquidation both in Bulgaria and in Cyprus, is facing 9,500 claims in Bulgaria amounting to 28.5 million euros and 2,500 claims in Cyprus amounting to 15 million euros.
Bulgarian authorities have already asked Cyprus to foot the bill for the money Olympic owes to its citizens.
Cypriot Financial Ombudsman Pavlos Ioannou said on Thursday that he received a letter from a Bulgarian official requesting Cyprus to cover the damages to Bulgarian claimants. He said he is considering the request taking into consideration Cypriot legislation.
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. Both they and the Cypriot clients of the company had to buy new road insurance.
English language newspaper Cyprus mail published documents which it said proved that the failure of the company could have been avoided had the Cypriot supervisor of insurance companies was more diligent and spotted warnings about its owners shadowy activities.
It said that 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.
It warned investors that 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 take cognizance of 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.
The report said that supervisors failed to spot the Spanish warning about the new owner of Olympic, further prohibitions for his parent company to deal in foreign currency.
A report by a reputable audit firm said it could not verify any of several claims about its financial health, including Brazilian sovereign bonds, immovable property, receivables and cash deposits in a shadowy bank in the Comoros islands, which, as it transpired, had the same registration number as one which was owned by him.
Cypriot Auditor General Odysseas Michaelides said via Twitter on Thursday that his office had spotted Olympic's shortcomings when it carried out its audit for 2014.
He said it was one of two companies which would face problems with the introduction of Solvency II, a European Union directive which introduced a harmonized prudential framework for insurance firms across the European Union.
He did not say if he alerted any authorities about his findings, and which.
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.
Officials said it all boils down to a 5 percent surcharge on road insurance premiums payed by each Cypriot car owner from now on.
