Jordan: Govt to liberalise compulsory auto insurance rates
Source: Middle East Insurance Review | May 2015
The Jordanian government is planning to liberalise premium rates for compulsory motor third-party insurance, following a study on the issue.
The Ministry of Industry and Trade and Supply, which conducted the study, has submitted a proposal to the Council of Ministers where it is currently being discussed, reported Al Ghad citing a source.
The source indicated that rate liberalisation would promote competition and the quality of services in the insurance industry. It added that after rates are freed, the government would be able to take action against insurers which collude with one another to set prices. Presently, premium rates for this line of business is set by the government.
Mr Othman M Bdeir, former Chairman of the Jordan Insurance Federation (JOIF), has estimated that insurance companies have lost around JOD150 million (US$212 million) since 2001 in mandatory motor third-party insurance. He said that the performance of insurance companies in Jordan would be good if compulsory insurance was excluded. He expects the loss situation to continue unless a solution is found, such as liberalising premiums.
Price liberalisation has been on the agenda for several years now, with previous deadlines for its implementation postponed several times.
JOD1 = US$1.41