Ammon News - The Central Bank of Jordan has rejected insurers' premium hike proposal while unveiling sweeping reforms to the mandatory motor insurance regulations, introducing stringent claims settlement timelines and a merit-based premium structure effective January 2025.

The regulatory overhaul mandates a five-business-day settlement window for claims up to JD 3,000 and extends it to ten business days for claims exceeding this threshold. Non-compliant insurers face monetary penalties of up to JD 10,000, with provisions for doubled sanctions upon recurrence.

In a significant move for actuarial stability, the central bank has maintained the existing premium structure while reinforcing the no-claims discount of 15 percent. This positions the premium for private vehicles (maximum 9 passengers) at JD 66.9, down from JD 78.75, while public transport vehicles in the same category will see premiums adjusted to JD 141.3 from JD 166.25.

The reformed regulatory framework introduces a claims-handling protocol allowing vehicles under three years of age to undergo repairs at authorized agency workshops, addressing longstanding concerns about depreciation and parts authenticity.

The central bank's decision follows an extensive analysis of the sector's underwriting performance, particularly examining the impact of a 14-year premium freeze against escalating global repair costs and parts inflation.

The new regulatory regime implements a JD 12 risk-loading factor for traffic violations, applicable exclusively to private and public small vehicles, while exempting fleet operators, mass transit vehicles, agricultural machinery, and specialized transport categories.

These prudential measures aim to enhance the sector's technical provisions while ensuring fair treatment of policyholders, marking what regulators term a strategic recalibration of Jordan's motor insurance market.

The reforms particularly emphasize expedited claims settlement mechanisms and enhanced market conduct standards, designed to strengthen public confidence in the insurance sector while ensuring sustainable underwriting practices.

The regulatory reforms represent the CBJ's most comprehensive intervention in the motor insurance segment to date, balancing policyholder protection with the sector's actuarial sustainability.