Firms optimistic about potential to raise TPL insurance

AMMAN — As the Industry, Trade and Supply Ministry insisted Monday that it is the only party authorised to price auto insurance, insurers said they expect to reach an agreement with the government over a new price for the compulsory third-party liability (TPL). 

On Monday, the ministry’s spokesperson, Yanal Barmawi, said there is no decision to raise TPL prices, adding that no party, except the ministry, has the right to raise insurance premiums. 

Barmawi’s statement came a few days after an insurance sector representative announced that companies had decided to increase the price of auto insurance by 20 per cent at the beginning of 2015. 

Jordan Insurance Federation (JIF) President Othman Bdeir on Monday said that the federation may reach an agreement with the authorities in the next few days over new mechanisms to charge higher prices. 

Bdeir told The Jordan Times that local insurance firms have requested that the federation increase TPL prices by 20 per cent, and the JIF will discuss solutions with the ministry to help the industry reduce its losses, which insurance companies claim are due to the fixed price of TPL. 

The JIF president was optimistic that an agreement would be announced soon, but declined to specify whether it would be related to raising prices by a certain percentage or floating them.

The federation has been demanding liberalisation of prices for over three years and reached an agreement with the government on full liberalisation of the insurance service in 2013, a decision that was supposed to go into effect in 2014, but did not.

Bdeir has previously noted that the current fixed price of JD93 has remained unchanged for the past seven years, and insurance firms get JD75 of the amount after the deduction of taxes and tariffs.

Since 2001, accumulated losses of insurance firms exceeded JD170 million due to fixed TPL charges, according to sector figures, while the overall capitals of all operating companies stand at JD300 million. 

There are 28 insurance firms operating in the domestic market.