Jordan: Insurers welcome new law but concerned with some provisions
Source: Middle East Insurance Review | Feb 2020
A number of issues in the proposed new insurance law still need to be ironed out, even as the insurance industry in Jordan is eager for the amended law to be enacted, said Mr Majed Smairat, president of the Jordan Insurance Federation (JIF).
The Parliamentary Economy and Investment Committee recently discussed and approved the draft insurance law ahead of sending it to the House of Representatives for a vote and then proceeding with constitutional procedures for the Bill to become law.
Mr Smairat said several points in the proposed amended law not agreed upon are those related to governance, as well as provisions that may entail additional costs for insurers. Among measures proposed are a traffic accident fund and a requirement for insurers to support troubled insurers, reported Em News.
The clause related to the traffic accident fund provides for a committee whose decision is binding on insurers. Insurers are barred from resorting to the courts if they do not agree with the compensation amount. Mr Smairat indicated that he had informed the Parliamentary Committee that this article violates the Constitution because it prohibits insurers from taking cases to court.
The proposed law also requires insurers to contribute a portion of their premiums to support troubled companies. Mr Smairat said insurers that are managed properly should not have to bear the burden of bailing out companies that fail financially due to incompetent management or underwriting. One proposal is for each insurer to place a deposit with the industry regulator of JOD1m ($1.4m), up from JOD300,000 at present so that the deposit may be used to fund troubled insurers.
Also among other changes, the law, when passed and gazetted, will transfer supervision of the insurance sector from the Insurance Department under the Ministry to the Central Bank of Jordan. M
JOD1 = $1.41