Misconceptions exist that the insurance industry benefited from lockdowns on activities during the COVID-19 pandemic, said Jordan Insurance Federation (JIF) director-general Maher Al-Hussein.
Citing the various ways in which the pandemic has affected the insurance sector, Mr Al-Hussein said insurers had to pay claims totalling millions of dinars as a result of business interruption claims, in addition to paying benefits for an increase in the number of deaths of borrowers who had bought mortgage insurance cover for their loans.
In an interview with the newspaper Al-Ghad, Mr Al-Hussein mentions that fears over health had increased among some Jordanians in the wake of COVID-19 and had led them to visit doctors more frequently. In addition, many insurance companies covered the costs of medical treatment for COVID-19.
Other consequences of the pandemic for insurance companies, as is the case with the rest of the world, are decreased purchasing and investment power, which has affected insurance sales.
For insurers, there is also an increase in debts and in provisions for receivables due to reduced collection of premiums from customers.
The suspension of the operations of entire economic sectors, such as hotels, schools and tour companies, and work on public-sector infrastructure projects as well as a decline in exports and imports, have also affected insurers.
As for the JIF itself, the pandemic resulted in lower premium volumes collected by the Unified Office for Compulsory Vehicle Insurance managed by the federation, due to lower demand for compulsory vehicle insurance because of a decline in incomes and the suspension of entire sectors from operations.
Mr Al-Hussein added that the JIF, in coordination with the insurance department of the Ministry of Industry and Trade at the time, sought to alleviate some of the difficulties faced by policyholders by extending the deadline for premium payments.
Regarding the performance of insurance companies in 2021, he said that according to preliminary data published for the majority of insurers on the Jordan Securities Commission’s website, the combined profits of 19 listed insurance companies fell by 39% last year to JOD15.6m ($22m) compared to JOD25.6 for 2020.
Biggest challenges
Asked about the biggest challenges facing insurance companies in the local market, Mr Al-Hussein said that the foremost challenge is the losses incurred from compulsory motor insurance, which had tariffs set by the state under the 2010 legislation.
The tariffs have not been reviewed since despite increases in the costs of spare parts, repair wages, medical treatment for the injured, as well as higher administrative and operating costs. The annual losses in compulsory auto insurance business amount to about JOD25m for the industry. M