Dispute looms between gov’t, insurers over third party liability service fees

AMMAN — A dispute between the government and insurance companies is looming over the heated issue of auto insurance premiums for compulsory third party liability (TPL). 

On Tuesday, the spokesperson of the Ministry of Industry, Trade and Supply, Yanal Barmawi, described a recent decision by Jordan Insurance Federation (JIF) to double service fees for TPL auto policies as illegal, urging the federation to immediately cancel the decision. 

According to a JIF official, the decision to raise fees from JD10 to JD20 was taken earlier this month in a bid to reduce losses by insurance companies. 

VIF President Ali Wazani, and its director, Mahir Hussein, refused to comment on the issue. 

But Barmawi told The Jordan Times that the federation does not have the jurisdiction to take such a decision or to increase the prices of any service fees, adding that only the ministry has the authority to set fees charged by insurers.

Barmawi said the ministry has urged the JIF to cancel the decision, indicating that the ministry would take legal action if the federation refuses to lower the fees and to guarantee that it would not take any decisions to increase charges in the future. 

However, an insider in the insurance sector said the federation is insisting on keeping the new price. 

The cost of TPL used to be around JD95 and with the new increase on service fees it would go up to JD105, said the industry insider, who requested anonymity. 

The issue of increasing TPL premiums has been a contentious matter for the past few years between authorities and insurance firms. 

Companies want prices to be floated while the Industry Ministry insists on keeping prices fixed. 

In 2013, the JIF reached an agreement with the government on full liberalisation of insurance service, a decision that was supposed to go into effect in 2014 but did not.

Over the past few years, three insurance firms have quit the market and another three have stopped offering car insurance services due to continuous losses, according to former president of the federation Othman Bdeir, who in previous remarks to The Jordan Times said that more companies are expected to follow suit if TPL prices do not increase.

Insurance firms claim they lose tens of millions of dinars annually due to TPL insurance. 

The Consumer Protection Society has repeatedly warned against raising TPL premiums, accusing insurance firms of being “greedy”.