Regulatory Alerts2021-12-15
Added · Updated
Central Bank of Jordan Circular No. 19355/2021 Regarding Total Loss Vehicle Insurance Contracts
The Central Bank of Jordan revokes previous approvals for issuing and marketing Total Loss Vehicle Insurance contracts, effective January 1, 2022. Insurance companies wishing to re-issue these contracts must submit new applications accompanied by specific technical data, including premium rate bases, reinsurance arrangements, and Sharia approval for Takaful entities. The circular mandates that deductible amounts must not exceed 10% of the compensation amount and requires adherence to anti-money laundering provisions and fair treatment principles.
[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 insured persons 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 given the existence of several violations of the instructions for issuing supplementary vehicle insurance documents for the year 2012; it has been decided to revoke the previous approvals granted for issuing and marketing vehicle insurance contracts - Total Loss, effective from January 1, 2022.
In the event that any company wishes to re-issue and market these contracts, it must submit a new application to be studied and amendments requested as appropriate, 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
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
[Central Bank of Jordan Logo]
Data Required pursuant to Circular No. (19355/2021) dated 15/12/2021
- General technical bases for Total Loss Vehicle Insurance contracts and the associated premium rates.
- 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, with the company committing to adhere to these rates and obtaining the Central Bank's approval before making any changes to them.
- Mechanism for determining insurance amounts, such that they are not less than the fair value of the vehicle.
- Reinsurance arrangements related to the contract.
- Application form for the Total Loss insurance intended for marketing and issuance, ensuring that the insurance application includes provisions that guarantee the insurance company's right to cancel the insurance contract during the period of delaying 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.
- Data table specific to the contract.
- Insurance contract model (in full), including general conditions, exclusions, coverages, and special benefits, ensuring that the contract provisions align with the provisions of the Insurance Business Regulation Law, prevailing systems, instructions, decisions, and other related legislation.
- Approval from the Sharia Supervisory Board for the insurance contract for companies practicing Takaful (cooperative insurance) business, 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.
- 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 principles of transparency and fair treatment of insured persons and beneficiaries, and the company's procedures to ensure the issuance of the contract according to approved premium rates.
- Separation between mandatory insurance and supplementary coverages.
- 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.