Jordan: Insurers revisit free mandatory auto insurance pricing
Source: Middle East Insurance Review | Apr 2016
Floating auto insurance premiums would improve road safety, Chairman of the Jordan Insurance Federation (JIF) Ali Al Wazani said, revisiting an issue that has arisen periodically over nearly four years.
Around 8% of the 1.42 million vehicles registered in Jordan are involved in causing traffic accidents each year, Dr Al Wazani said. He told The Jordan Times that the number of cars involved in accidents is around 114,000 yearly.
He explained that floating the price of compulsory third-party liability (TPL) insurance, which is now fixed at JOD95 (US$134), would allow insurance providers to charge higher rates to motorists who have a poor traffic record because they will be considered high-risk drivers, while others with clean records would be given discounted rates. This approach would force drivers to improve their behaviour on the road, he said.
Dr Al Wazani said that floating TPL rates may result in lower premiums as competition among the 24 insurance firms will increase.
“Historically, the majority of products whose prices were liberalised never got more expensive, but instead got cheaper,” he said. “The vast majority of motorists in Jordan pay the current fixed premiums in order to pay for the minority involved in accidents.”
The JIF reached an agreement with the government on full liberalisation of insurance services in 2013. This was supposed to have taken effect in 2014, but did not because the Ministry of Industry, Trade and Supply said it was carrying out a study into the changes.
Asked for an update of the study, Dr Al Wazani said that the Ministry had promised to give an answer to the federation in the near future, adding that the sector expects a positive outcome from the study.
JOD1 = US$1.41