The Central Bank of Jordan (CBJ) has estimated that the increase in motor third-party liability (MTPL) insurance premiums by JOD12 ($17) for drivers who commit traffic violations would raise an additional JOD9.8m ($13.8m) in premiums for insurance companies this year.
CBJ governor Dr Adel Sharkas, giving the estimate in a reply to a question from a lawmaker, said that the additional premiums generated would cover a part of motor losses suffered by insurers and would not eliminate them, according to local media reports. Motor losses reported by insurers amounted to JOD28.2m in 2022 and JOD26.4m in 2023.
The central bank decided in December 2024 to add JOD12 to motor insurance premiums payable by those who commit traffic violations.
Dr Sharkas explained that the previous increase in the mandatory motor insurance premium was in 2010. This was a 25% hike from premiums set in 2001, in addition to an additional premium of JOD10 levied on both the driver and owner of the vehicle involved in an accident.
Additional premium
The JOD12 premium increase will not apply to rental vehicles, private and public buses, private and public freight vehicles, agricultural and construction vehicles, driver training vehicles, emergency vehicles, hearse vehicles, mobile restaurant vehicles, and motorcycles."
He pointed out that the JOD12 increase would contribute to traffic safety.
The additional premium was decided on after a study and in-depth analysis that considered the sustainability of compulsory insurance and the soundness of insurance companies' financial positions.
Action was taken after some insurance companies expressed their intention to stop offering compulsory traffic insurance coverage due to ongoing losses. Withdrawal by insurers from the business would mean that citizens would face difficulty obtaining MTPL insurance.
At present, the number of insurance companies with motor insurance licences in Jordan stands at 17. However, three of them are barred from issuing new mandatory motor insurance policies because of their financial condition which could affect their ability to meet their obligations.
Dr Sharkas stressed that the CBJ has worked to maintain motor insurance premiums for 14 years, during which time vehicle repair and spare parts costs continued to rise globally, leading to losses in insurance companies.