Insurance sector continues to bleed

AMMAN – Jordan Insurance Federation (JIF) board member Ali Wazani on Saturday called for floating the prices of compulsory third-party liability (TPL) auto insurance to stop the financial losses of insurance firms in the Kingdom. 

Wazani said preliminary results show that 18 companies lost over JD7.1 million in the first half of this year, blaming regulations and instructions governing the auto insurance services, mainly the fixed price rate on TPL. 

The current price of compulsory TPL insurance is JD92.15 per year. 

The JIF board member expected the insurance sector to see more losses if the current policies continue, noting that several firms are considering leaving the market in order to end  losses. 

Wazani indicated that gross insurance premiums increased by 5.8 per cent at the end of June, reaching JD268.1 million compared with JD253 million during the same period of last year.

However, compensations went up at a faster pace of 8.7 per cent reaching JD171 million from JD157 million registered at the end of June 2013. 

He said  insurance services based on Islamic Sharia currently account for nearly 7 per cent of the market share, noting that it may go up to 10 per cent in the coming two years. 

Commenting on the government's endorsement of Islamic Sukuk law, Wazani said Islamic insurance firms in Jordan used to invest their funds in the Arab Gulf market due to its attractive investment tools, adding that the recent government decision would encourage many companies to be based in the Jordanian market.