(MENAFN - Jordan Times) The government is likely to liberalise prices of compulsory third party liability (TPL) insurance service this year.
Jordan Insurance Federation (JIF) President Othman Budair told The Jordan Times yesterday that a final decision by regulatory authorities is pending the outcome of a study on the industry.
Jordan Insurance Commission, which the government regulatory body, will task a foreign consultancy firm to carry out a study on the insurance sector in the country to find solutions for stopping financial losses incurred by service providers.
Insurance companies blame the fixed price of compulsory TPL for their losses.
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 on motors.
"The commission understands that the best way to stop financial bleeding of insurance firms is through liberalising prices," the JIF chairman said, adding that the commission has requested insurance firms to keep TPL charges unchanged and to wait until the study is completed.
The study will take few months, according to Budair.
Indicating that there are 28 insurance companies in the local market, he explained that price liberalisation will sharpen competition which may push some firms to reduce their prices below the current fixed rate of JD92 per insurance policy.
Other companies may also increase their charges depending on the type of services motorists can receive, he said.
According to JIF data, only five companies out of the 28 in the local market were able to generate modest profits in 2011, while there are several firms on the verge of bankruptcy.