Jordan’s Consumer Protection Society (CPS) refused proposals to remove the cap on the prices of compulsory third party liability (TPL) auto insurance.
Stressing that Jordanians currently suffer from difficult economic conditions, CPS President Mohammad Obeidat said liberalizing insurance prices would serve the interests of insurance companies, describing the claims of service providers that removing the price ceiling on TPL will not result in higher prices as inaccurate.
Over the past several months, insurance firms have been blaming the government’s fixed TPL prices for their losses.
In previous remarks to The Jordan Times, Jordan Insurance Federation (JIF) President Othman Budair said the government was likely to liberalize the prices and that a final decision would be taken once the outcome of a study on the industry is ready.
According to Budair, the sector’s losses in 2011 were around JD28 million, while the projected losses for 2012 may exceed JD30 million as a result of the current insurance system for motor vehicles.
The Jordan Insurance Commission, a regulatory body, will assign a foreign consultancy firm to carry out a study on the local insurance sector to find solutions to the financial losses incurred by insurers.
But Obeidat insisted that the outcome of the study, which he said should be conducted by a neutral party, must be presented to a committee representing all stakeholders, including the CPS and insurance buyers.
The current economic conditions in Jordan and rising living costs should be considered before taking any decision to liberalize TPL insurance prices, Obeidat told The Jordan Times.
Budair argued previously that due to the fact that there are 28 insurance companies in the local market, price liberalization would sharpen competition and may push some firms to reduce their prices below the current fixed rate of JD92 per insurance policy.