Hi Sisko,
I'm in exactly the same situation as you .. my daughter is going out to limassol next week for a year. I've just found a website that lets you call both landlines and cypriot mobiles at cheap rates . Obviously haven't tried it yet so no idea on quality but can let you know when I have. http://www.cherry-call.co.uk/europe/phone_cyprus.jsp I'm still researching sim cards for her to use out there but think we'll just go with a local pay as you go option.
Insurance has been hard work, though I did find 1 stop travelinsurance that covered manual work (bar restaurant, waitress , chalet maid, au pair and nannys and retail work ) as you didn't say what your daughter will be doing I hope that helps a bit.
all the best