‘Insurers to raise auto third-party liability price by 20 per cent in 2015’

AMMAN – Insurance firms have decided to increase the price of compulsory auto third-party liability (TPL) by 20 per cent at the beginning of 2015, an industry representative said Tuesday. 

The source, who requested anonymity, said insurance companies in the Kingdom can no longer bear the losses incurred by the “low” fixed price of TPL, adding that the Jordan Insurance Federation (JIF) has been demanding for years that prices be floated and linked to inflation rates. 

The industry insider said out of the 28 insurance firms operating in the domestic market, 27 companies agreed to raise their TPL fees, blaming the government for financial losses burdening insurers “as the government has been studying the option of floating auto insurance premiums for years”. 

According to the industry representative, accumulated losses of insurance companies since 2001 exceed JD170 million due to fixed TPL charges, while the overall capitals of all operating companies stand at JD300 million. 

In recent remarks to The Jordan Times, JIF President Othman Bdeir said the federation has been demanding liberalisation of prices for over three years and it 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 said the current fixed price of JD93 has remained unchanged for the past seven years, noting that insurance companies get JD75 of the amount after the deduction of taxes and tariffs.  

Insurance compensations have increased due to the higher prices of spare car parts, he added.