Jordan’s insurance sector is navigating through a challenging stretch at present – coping with the twin realities of the COVID-19 pandemic and the imminent switch of regulator to the central bank. Jordan Ministry of Industry, Trade and Supply’s Ms Naljan Hakuz provides us with some unique insights on what the future of insurance regulation in Jordan might look like.
In the uncertain world of the pandemic it does not come as any surprise that the regulator of the insurance sector conserved its energy during 2020 in order that it might focus on future developments.
Insurance regulatory change in the past 12 months was deemed to be inappropriate. “Considering the upcoming transfer of supervision over the insurance sector to the Central Bank of Jordan (CBJ) and due to the circumstances of the COVID-19 pandemic, there were no regulatory changes in Jordan in the past 12 months for either non-life insurance, life insurance or reinsurance sector,” said Jordan Ministry of Industry, Trade and Supply insurance administration (MIT/IA) director Naljan Hakuz.
More than just regulation
While there were no significant insurance regulatory changes, this does not mean that the regulator was not fully occupied in helping insurers cope with the strains of the pandemic.
“The MIT/IA took several measures to mitigate the repercussions of the spread of COVID-19 on the insurance sector,” said Ms Hakuz.
The first of these initiatives covered the motor sector.
According to Ms Hakuz these include, “Automatic extension of compulsory motor insurance policies for Jordanian vehicles for the period 21/3/2020-31/5/2020 during the emergency period and also during the curfew 21/3/2020-10/5/2020, premium for the extended period – which is calculated on a daily basis – to be paid afterward with the new motor insurance policy.
“This decision was taken to avoid the absence of insurance coverage and avoid congestion in vehicle and drivers licensing centres once the curfew was lifted,” she said.
Help for businesses too
Other measures aimed at supporting the insurance sector included, “An extension of the deadline to submit 1Q2020 financial statements of insurance companies to MIT/IA to 30 June 2020 instead of 30 April 2020,” said Ms Hakuz.
In terms of distribution of profits of insurance companies in Jordan, Ms Hakuz said that MIT/IA was, “Preparing an internal study on the distribution of insurance companies’ profits under the COVID-19 pandemic and comparing with global applications in this regard.”
She went on to say, “Taking into account the distribution of the insurance portfolio in Jordan and the expected effects of COVID-19 on the results of the insurance companies’ business, the decision was adopted on an individual basis of each insurance company for the purposes of approval/disapproval of the distribution of profits to shareholders.”
MIT/IA also followed best industry practices in ensuring the effects of the pandemic were limited on insurance players themselves.
“The continuity of the insurance sector during the emergency period and curfew starting from 18 March 2020,” was ensured according to Ms Hakuz, “through activation of remote-work mechanisms by insurance companies, especially regarding the medical insurance sector, and the activation of emergency plans related to the sustainability of work.”
She went on to say, “For the purposes of continuity of work, the MIT/IA facilitated the movement of insurance employees by gradually granting permits during the curfew to insurance companies’ employees and insurance business administration companies’ employees. This is to ensure the sustainability of the insurance business and enable the sector to serve the insured, pay hospital claims and grant medical approvals to open the sector completely.”
The year ahead
We asked Ms Hakuz if she could tell us a little about the regulatory changes anticipated for the year ahead – and whether they might affect the life sector, non-life sector or reinsurance sector.
“The new insurance law was recently approved by the Jordanian parliament and will be effective 30 days after its publication in the official gazette,” Ms Hakuz said. “Under the new law the supervision of the insurance sector in Jordan will be transferred to the CBJ.”
Broker licensing and e-insurance
Regulatory changes that might affect insurance brokers in Jordan are being considered, according to Ms Hakuz. “As the regulatory responsibility will move to the CBJ, it may be a good opportunity to revise insurance broker legislations, to fill some gaps that exist in it, and to add some articles regarding the recent changes in insurance industry such as e-insurance,” she said. “In addition, it is time to study how we can change licensing brokers from natural to juridical brokers.”
Other regulatory areas
Most nations are also grappling with systemic insurance issues such as implementing IFRS17 and capital adequacy and Jordan is no exception.
“IFRS17 will be fully implemented in 2022,” said Ms Hakuz. “As for now, all insurance companies have prepared a gap analysis and they are now in the designing phase.
“We expect this standard will need a lot of internal changes in IT systems and will have a higher effect on insurance companies which practice life assurance compared to non-life insurance,” Ms Hakuz said. M