The Central Bank of Jordan (CBJ) will start regulating the insurance sector next year, said the Deputy Governor of the bank, Dr Maher Sheikh Hassan.
He told the Tomorrow newspaper: “The oversight of the insurance sector will be under the umbrella of the central bank as of the middle of next year after the completion of all the procedures.”
The insurance industry is currently supervised by Ministry of Industry, Trade and Supply, which took over the function in 2014 when the Insurance Commission was scrapped in a government austerity drive.
Last February, the Jordanian Cabinet approved a recommendation by the services, infrastructure and social affairs ministerial committee to task the CBJ with regulating the insurance sector in line with international regulatory practices.
There is also a need to update the regulatory framework for the insurance sector. This would involve improving the financial solvency of insurance companies, developing clear and transparent criteria for solvency and strengthening corporate governance requirements for insurance companies, separating life insurance business and general insurance business in composite insurers, and introducing prudential requirements with respect to the investment policies of insurance companies.
A committee headed by Dr Sheikh Hassan will be formed to oversee the transition. Other committee members include officials of the Insurance Department of the Ministry of Industry, Trade and Supply, as well as consultants in the sector.
Asked about mergers among insurance companies in the Kingdom, which the government is promoting with fiscal incentives, Dr Sheikh Hassan said: “It is premature to talk about this subject and we cannot say who will stay and will come out, but we emphasise that there is no concern about the fate of these companies.”
He stressed that it is the interests of all who is involved in the insurance industry that the sector be strong and advancing, pointing out that there will be time to straighten out the need for consolidation of some insurers.
Two insurers, First Insurance and Yarmouk Insurance, merged earlier this year in what is reportedly the first merger of insurers in around 25 years in Jordan. At present, there are 24 insurance companies licensed in the Kingdom.