Cancellation of Previous Approvals for Total Loss Vehicle Insurance Contracts

[Central Bank of Jordan Logo]

Reference No: 17 / 3 / 19355
Date: 10 / Jumada al-Awwal / 1443 AH
Corresponding to: 15 / 12 / 2021 AD

Dear Insurance Companies,

In light of the Central Bank's commitment to protecting the rights of policyholders and beneficiaries and ensuring the integrity of the insurance sector, and to guarantee that insurance companies deal with their clients in a fair and transparent manner, and market and issue insurance contracts based on sound technical foundations, and considering the existence of a number of violations of the instructions for issuing supplementary vehicle insurance documents for the year 2012; it has been decided to cancel the approvals previously granted for issuing and marketing vehicle insurance contracts - Total Loss, effective from 2022/1/1.

In the event that any company wishes to re-issue and market these contracts, it must submit a new application to be studied and any amendments requested properly, pursuant to Article (27) of the Insurance Business Regulation Law, accompanied by at least the data required in the Annex.

Please accept our highest respect,,,

The Governor
Dr. Ziad Fraiz

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Copy / Jordanian Union of Insurance Companies.
Copy / Jordanian Association of Insurance Brokers.
Copy / Dear Insurance Agents.

P.O. Box 37 Amman 11118 - Jordan ● Phone: 4630301 ● Fax: 4638889, 639730, 461330 website:www.cbj.gov.jo e-mail:info@cbj.gov.jo

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[Central Bank of Jordan Logo]

Data Required pursuant to Circular No. (19355/2021) dated 15/12/2021

1. The general technical bases for the vehicle insurance contract - Total Loss and the associated premium rates.
2. Bases and mechanisms for determining premium rates and the technical bases approved by the company's board of directors and the actuary's certificate regarding the technical bases for the approved premium rates, provided that the company adheres to these rates and obtains the Central Bank's approval before making any changes to them.
3. Mechanism for determining insurance amounts, such that they do not fall below the fair value of the vehicle.
4. Reinsurance arrangements related to the contract.
5. The total loss insurance application form intended for marketing and issuance, and the insurance application must include provisions that ensure the insurance company's right to cancel the insurance contract during the period of postponing the verification of the beneficiary's identity, in accordance with the provisions of Paragraph (d) of Article (5) of the Anti-Money Laundering and Combating the Financing of Terrorism Instructions in Insurance Activities No. (2) of 2016 and its amendments.
6. The data table for the contract.
7. The insurance contract form (in full) including the general conditions, exclusions, coverages, and special benefits, and the provisions of the contract must conform to the provisions of the Insurance Business Regulation Law, the prevailing systems, instructions, and decisions, and other related legislations.
8. Approval from the Sharia Supervisory Board for the insurance contract for companies practicing Takaful (cooperative) insurance, and including in the insurance contract models the provisions specific to Takaful insurance, which include the main bases and principles of Takaful insurance adopted by the Takaful insurance company.
9. The marketing plan and distribution channels intended to be adopted, and ensuring the suitability of brokers and agents in case sales are made through them, and adhering to the principles of transparency and fair treatment of policyholders and beneficiaries, and the company's procedures to ensure the issuance of the contract according to the approved premium rates.
10. Separation between mandatory insurance and supplementary coverages.
11. Determination of a clear, fair, and reasonable deductible (retention) amount, which shall not exceed 10% of the compensation amount in the case of total loss.

P.O. Box 37 Amman 11118 - Jordan ● Phone: 4630301 ● Fax: 4638889, 639730, 461330 website:www.cbj.gov.jo e-mail:info@cbj.gov.jo

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