Central bank establishes new guidelines for compulsory vehicle insurance

The Central Bank of Jordan (CBJ) approved significant amendments to the regulations governing mandatory vehicle insurance, following a thorough analysis of the financial challenges facing the insurance sector in the country.

In a statement released on Tuesday, the CBJ emphasized that these changes aim to balance the financial sustainability of insurance companies with the need to reduce burdens on citizens while ensuring timely and fair compensation for victims of accidents. These amendments will take effect on Jan. 1, 2025.

Key features of the new regulations include streamlined procedures for settling claims and compensating accident victims. Compensation for amounts up to JD 3,000 will be processed within five working days, while claims exceeding that amount will be settled within 10 working days.

Insurance companies that fail to meet these deadlines will face penalties, including fines of up to JD 10,000, which may double in the case of repeated offenses. The new rules also mandate transparency and fairness in dealings with victims and require insurance companies to provide clear guidance to assist in the claims process.

The CBJ clarified that it did not approve the proposed increase in the mandatory insurance premium suggested by insurance companies. Instead, the current premium rates for all vehicle categories will remain unchanged.

Furthermore, compliant drivers who avoid traffic violations during the insurance year will receive a 15 percent discount on their mandatory insurance premium. As a result, the premium for private vehicles will be set at JD 66.9, down from JD 78.75, while public vehicles will now cost JD 141.3 instead of JD 166.25.

In cases where traffic violations occur, a one-time fee of JD 12 will be added to the insurance premium for both private and public small vehicles. This increase will not affect other vehicle categories, including rental cars, buses, trucks, or agricultural and construction vehicles.

These amendments are a strategic move aimed at enhancing the services provided by the insurance sector and promoting public safety by encouraging adherence to traffic laws. They are also expected to bolster the sustainability of the insurance industry in Jordan through improved transparency and efficiency in interactions between insurance companies and their clients.