Insurance premium hike targets traffic violators, leaves clean drivers unaffected - CBJ

AMMAN — The Central Bank of Jordan (CBJ) has announced that the recent JD12 increase in mandatory car insurance premiums for traffic offenders aims to reduce financial losses for insurers, with an expected impact of JD9.8 million.

CBJ Governor Adel Sharkas said that while the adjustment will help offset losses, it remains insufficient to cover the JD26.4 million in technical losses recorded in 2023 and JD28.2 million in 2022.

He emphasised that the increase is not a tax but a necessary measure to ensure the sustainability of compulsory insurance, enabling companies to meet their obligations to accident victims, according to Al Rai Newspaper.

Amid persistent losses, several insurers have considered withdrawing from the compulsory insurance market, raising concerns over potential disruptions in coverage. 

Sharkas warned that such a development could leave accident victims without compensation and destabilise the sector.

The surcharge will be applied only once to small private and public vehicles involved in traffic offences, while drivers maintaining a clean record for a year will continue to benefit from a 15 per cent discount.

Currently, 17 companies are licensed to provide motor insurance in Jordan, though three have been barred from issuing new compulsory policies due to financial instability. 

Despite rising global repair costs, the CBJ has maintained insurance premiums at the same level for 14 years, adding to insurers' financial strain.