Jordan - Insurers in talks to stop mandatory auto 3rd-party cover
Source: Middle East Insurance Review | Nov 2016
A number of insurance companies have begun discussing a decision to stop issuing motor mandatory third-party liability (MTPL) insurance policies early next year in a move to stop losses.
The insurance industry estimates that it has lost JOD220 million (US$310.3 million) between 2005 and last year in MTPL insurance. Losses this year are expected to reach JOD20 million, reported the Jordan Zad news agency citing an industry source.
The insurers involved will approach the Jordan Insurance Federation and inform it of their decision and to request that the association convey this to the official authorities.
Insurers have for several years urged immediate measures to liberalise motor tariffs which are capped by the government. They said that losses are threatening the continued operation of this class of business. Three insurers have gone bankrupt while three others have stopped offering the cover.
The number is likely to rise in light of the continuing losses year after year, the source added. He said that it would be more meaningful to let insurers compete among themselves. There are 24 insurance companies operating in Jordan.
Reforms in the MTPL insurance segment has been deferred for several years. One reason is changes in administration which have delayed regulatory changes. The insurance industry is currently supervised by the Ministry of Industry, Trade and Supply, which took over the function in 2014 when the Insurance Commission was scrapped in a government austerity drive. The Central Bank of Jordan will start regulating the insurance market next year.
MTPL insurance accounted for 27.4% of total non-life premiums in Jordan’s insurance industry, but claims paid in this class made up 57.9% of non-life paid claims last year.
JOD1 = US$1.41