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Floating of auto insurance rates postponed for two months

By Muath Freij - Feb 07,2013 - Last updated at Feb 07,2013

AMMAN — The Jordan Insurance Federation (JIF) and the Insurance Commission have agreed to postpone floating the prices of compulsory third-party liability (TPL) auto insurance for two months, JIF President Othman Budair said on Thursday.

Budair noted that the prices were scheduled to be floated — set by the market rather than regulators — in March, but the two entities are still discussing technical details regarding the decision.

In previous remarks to The Jordan Times, the JIF president said that prices are not expected to rise significantly following deregulation, saying that the difference will not be huge as the price will increase between JD10 and JD15 a year.

The current price of compulsory TPL insurance is JD92.15 per year, according to a source in one of the Kingdom’s insurance companies, who preferred not to be named.

Budair stressed that the new decision will encourage competition among the Kingdom’s 28 insurance firms, noting that these companies have suffered JD60 million in TPL losses over the past two years.

Meanwhile, Budair said that the JIF informed the Ministry of Industry and Trade about the hardships and difficulties the insurance sector in Jordan is facing.

“The minister conveyed our demands to the Economic Development Committee. In the next few days, we will have several intensive deliberations,” he told The Jordan Times over the phone.

Budair indicated that the insurance sector is one of the most important sectors in the Kingdom’s economy.

“We did not only ask for floating the prices of TPL, but also for improving this sector,” the JIF president added.

Budair said the large number of insurance firms in Jordan is one of the negatives in the sector.

“There are around 28 insurance firms, which is too many. For example, in Japan, there are only nine companies,” he said, adding that six companies are facing bankruptcy.

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