Central Bank of Jordan Instruction No. 4 of 2023 Regarding Fines for Insurance Activities

Instruction No. 4 of 2023
Instructions on Fines Specific to Insurance Activities Issued by the Board of Directors of the Central Bank pursuant to the provisions of Clause (9) of Paragraph (b) of Article (42) and Article (96) and Paragraph (b) of Article (109) of the Insurance Activities Regulation Law No. (12) of 2021

Contents Page
Article (1): Title and Entry into Force .................................................................................... (2)
Article (2): Definitions ........................................................................................................ (2)
Article (3): Scope of Application ............................................................................................ (2)
Article (4): Violations ........................................................................................................ (2)
Article (5) ..................................................................................................................... (8)
Article (6) ...................................................................................................................... (8)
Article (7) ...................................................................................................................... (9)

Article (1)
The title of these instructions is "Instructions on Fines Specific to Insurance Activities 2023", and they shall enter into force from the date of their publication.
(2023/3/20)

Article (2)
a) The terms and expressions used in these instructions shall have the meanings assigned to them in Article (2) of the Insurance Activities Regulation Law No. 12 of 2021, unless the context indicates otherwise. b) These instructions amend the term "Law" to mean the Insurance Activities Regulation Law No. 12 of 2021.

Article (3)
a) The provisions of these instructions shall apply to:
-1 Insurance companies licensed in the Kingdom.
-2 Any person conducting without a license or approval any activity related to insurance activities that requires a license pursuant to the provisions of the Law. b) The provisions of these instructions shall not apply to insurance service providers licensed in the Kingdom.

Article (4)
In the event that it is established that an insurance company or any of its employees, agents, or representatives, or a person other than an insurance company and insurance service providers has violated the provisions of the Law or any of the regulations, laws, and decisions issued pursuant thereto, or if it is established that an insurance company or any of its employees, agents, or representatives has conducted business without a license or in an unauthorized or unapproved manner, or has insured them, then in any of these cases, the Central Bank may impose a fine within the limits specified:

a) Insurance Company Violations:

Fine (Thousand JD)	Item	Violation
10-1	1	Violation of the principle of transparency in the instructions regulating the practice of insurance and the internal controls for dealing with policyholders in a clear and transparent manner, including the submission of claims and documents provided by the principle of transparency and providing explanations and clarifications.
5-15	2	Delay in paying the compensation due to the insured or beneficiary within the period stipulated in the instructions regulating the practice of insurance and the internal controls for dealing with policyholders.
20-40	3	Refusal to accept a request for insurance, renewal of insurance, determination of insurance coverage, or increase in premiums without justification.
5-40	4	Issuing insurance policies that do not cover life insurance with a single type of life insurance policy, while regarding the insurance premium or the amount of profits to be distributed to the insured or otherwise, the conditions are not clearly stated on a sound basis.
40-45	5	Violation of the instructions contained in the insurance policy documents signed by the policyholder, including the unified insurance card agreement for motor vehicles (the Orange Card).
40-45	6	Failure to comply with the insurance policy containing clauses that exempt it from liability in the insurance policy in bold, even if different, or without mentioning them appropriately.
1-30	7	Failure to comply with the insurance policy containing the terms of the policies, agreements, or commitments related to the company approved by the Central Bank or provided to it and in accordance with the prevailing laws.
5-15	8	Violation of the instructions on insurance solvency standards issued.
10-25	9	The insurance company retaining insurance premiums received by the company from within the Kingdom and outside it (25%) of the company's insurance premiums for the year before the annual audited financial statements are published.
15-30	10	Failure by the insurance company to retain assets equivalent to at least 80% of the technical provisions in the same currency, and at least 5% of the total technical provisions in other currencies.
15-30	11	Investing in foreign accounts, deposits, and certificates of deposit issued by banks in a manner inconsistent with the provisions of the instructions on the investment of insurance company funds issued.
10-40	12	Violation of the instructions on the investment of insurance company funds issued.
20-40	13	Dealing by the insurance company with a reinsurer, fund, or insurance association in a manner contrary to the provisions of the insurance solvency standards instructions issued.
10-30	14	Marketing or contracting with insurance products without complying with the conditions approved by the Central Bank.
50-100	15	The insurance company issuing insurance policies or insurance contracts that it is not licensed to issue or for which a decision has been issued to suspend or cancel its license.
1-5	16	The insurance company transferring its business inside or outside the Kingdom or suspending its business or closing it without obtaining the prior approval of the Central Bank.
5-15	17	Violation by the insurance company of the conditions determined by the Central Bank in the approval issued to it regarding the issuance of a renewal inside or outside the Kingdom.
10-20	18	The insurance company opening a renewal business inside the Kingdom without obtaining the prior approval of the Central Bank.
30-50	19	The insurance company opening a renewal business outside the Kingdom without obtaining the prior approval of the Central Bank.
10-30	20	Failure by the insurance company to comply with the provisions of the instructions on the conditions for appointing an external auditor for insurance companies and the scope of his work and the applicable regulations.
10-50	21	Violation by the insurance company of the instructions on the calculation of technical provisions issued.
20-40	22	Failure by the insurance company to provide the Central Bank with a certificate from the statutory auditor or the auditor approved by it containing a statement of the technical provisions retained by the company in the final financial statements of the company.
15-30	23	Failure by the insurance company to provide the statutory auditor or the auditor approved by it with the necessary data, information, documents, or papers for the purpose of performing the audit and the responsibilities assigned to him.
25-50	24	Failure to publish the financial statements of the insurance company subject to the approval of the Central Bank before obtaining its approval on this matter.
5-20	25	Failure by the insurance company to provide the Central Bank with the financial statements, regulatory forms, and their necessary approvals for the issuance of approval to publish the financial statements or that regulatory requirements are included in the Law or regulations, instructions, or decisions issued pursuant thereto.
10-20	26	Failure by the insurance company to provide the Central Bank with the policies, decisions, or agreements related to the company or information related to the insurance company requested by the Central Bank.
5-40	27	Refusal by the insurance company to provide the Central Bank with data, information, documents, or reports requested or to answer the inquiries of the Central Bank.
5-30	28	Deficiencies in the internal control and supervision systems of the insurance company in a manner that does not enable it to detect violations and report them to the Central Bank.
20-30	29	Failure by the insurance company to comply with the provisions of the governance instructions for insurance companies issued related to internal audit, risk management, or compliance.
20-30	30	Violation of the conditions related to the functioning of the committees derived from the management of the insurance company and in accordance with the governance instructions for insurance companies issued.
35-40	31	Nomination or appointment of a person as a member of the management committee of the insurance company without obtaining the prior approval of the Central Bank.
10-30	32	Nomination, appointment, transfer, promotion, or dismissal of any senior employee in the insurance company without obtaining the prior approval of the Central Bank, except in the case of dismissing or appointing a senior employee for a period not exceeding three months.
5-40	33	Issuing the organizational chart of the insurance company or amending it without obtaining the approval of the Central Bank.
20-50	34	Failure by the Central Bank to inform that any information has emerged that may negatively affect the soundness of the members of the management committee of the insurance company or the senior employees thereof.
5-50	35	Violation of the provisions on supervision and transparency stipulated in the Law or in the governance instructions for insurance companies issued.
5-25	36	Violation of the provisions related to ensuring the integrity and competence of the information technology management in the insurance company and stipulated in the governance instructions for insurance companies issued.
1-10	37	Failure to notify the Central Bank of the date of holding the general assembly meetings at least five working days before their convening.
1-10	38	Failure to provide the Central Bank with the minutes of the general assembly meetings within a period not exceeding five days from the date of approval by the company auditor or his representative on the meeting minutes.
5-10	39	Failure to provide the Central Bank with a detailed report if an incident of loss, damage, theft, fraud, or shortage of the insurance company's assets is discovered.
5-10	40	Failure by the Central Bank to inform of the vacancy of a position in the management committee of the insurance company or the senior employees thereof.
1-10	41	Failure to comply with the specified period for filling the vacant position in the management committee of the insurance company or the senior employees thereof and in accordance with the provisions of the governance instructions for insurance companies issued.
1-10	42	Violation of the provisions related to providing the Central Bank with correspondence, data, or information submitted by the insurance company or received by it from other regulatory authorities and stipulated in the governance instructions for insurance companies issued.
1-20	43	Dealing with an insurance agent whose license is suspended or revoked or whose license is cancelled.
1-10	44	Dealing with an insurance broker whose license is suspended or revoked or whose license is cancelled.
1-10	45	Dealing with an adjuster whose license is suspended or revoked or whose license is cancelled.
1-20	46	Dealing with a loss adjuster whose license is suspended or revoked or whose license is cancelled.
5-20	47	Dealing by the insurance company with a bank and authorizing it to practice the authorized insurance activities on its behalf while it is suspended, revoked, or cancelled from practicing the authorized insurance activities.
5-40	48	Dealing with a reinsurance broker whose license is suspended or revoked or whose license is cancelled.
5-40	49	Dealing with a non-resident reinsurance broker whose approval granted to him has been revoked or the approval granted to him has been cancelled to deal with insurance companies operating in the Kingdom.
10-40	50	Dealing with a statutory auditor whose license is suspended or revoked or whose license is cancelled.
50-125	51	Dealing with an insurance asset management company whose license is suspended, revoked, or cancelled.
50-125	52	Dealing with a claims adjuster whose license is suspended or revoked or whose license is cancelled.
20	53	Dealing with an unlicensed person to practice the activities of insurance agency or dealing with an insurance agent in an unlicensed branch.
15	54	Dealing with an unlicensed person to practice the activities of insurance brokerage or dealing with an insurance broker in an unlicensed branch.
15	55	Dealing with an unlicensed person to practice the activities of adjustment for insurance purposes or dealing with an adjuster in an unlicensed branch.
20	56	Dealing by the insurance company with an insurance agent who is not licensed to deal with it and is licensed to another insurance company.
15	57	Dealing with an unlicensed person to practice the activities of loss settlement for insurance purposes or dealing with a loss adjuster in an unlicensed branch.
15	58	Dealing by the insurance company with a bank and authorizing it to practice the authorized insurance activities on its behalf while it is not licensed for this or dealing with a bank to practice the authorized insurance activities in an unlicensed branch.
40	59	Dealing with an unlicensed person to practice the activities of reinsurance brokerage or dealing with a reinsurance broker in an unlicensed branch.
40	60	Dealing with a non-resident reinsurance broker who has not been granted approval to deal with insurance companies operating in the Kingdom.
40	61	Dealing with an unlicensed person to practice the activities of statutory audit or dealing with a statutory auditor in an unlicensed type of insurance.
100	62	Dealing with an unlicensed person to practice the activities of an insurance asset management company or dealing with an insurance asset management company in an unlicensed branch.
100	63	Dealing with an unlicensed person to practice the activities of a claims adjuster or dealing with a claims adjuster in an unlicensed branch.
5-15	64	Failure by the insurance company to inform the Central Bank of any change, amendment, or cancellation occurring to the agency agreement concluded between the company and the insurance agent within the period specified in the instructions on licensing insurance agents and organizing their work and responsibilities issued.
5-15	65	Failure by the insurance company to comply with the instructions on licensing insurance agents and organizing their work and responsibilities issued.
5-15	66	Failure to inform the Central Bank of any change or amendment occurring to the agreement concluded between the insurance company and the bank licensed to practice the authorized insurance activities within the period specified in the relevant instructions.
5-15	67	Failure to notify the Central Bank of the discovery by the insurance company of a violation by the licensed bank to practice the authorized insurance activities of the provisions of the Law, regulations, instructions, or decisions issued pursuant thereto relevant to its work.
20-40	68	Non-compliance with exchanging information related to insurance contracts held by the insurance company with the Central Bank and any other parties in accordance with the provisions of the Law and the relevant issued instructions.
5-50	69	Obstructing, objecting to, or hindering the inspection and supervision activities of the Central Bank employees or any of those appointed or assigned by them in accordance with the provisions of the Law, regulations, instructions, or decisions issued pursuant thereto, or failing to provide them with the requested data, documents, and papers to perform their duties, or intervening to prevent them from obtaining information or any matters necessary to complete their work.
5-50	70	Violation by the insurance company of the provisions of the instructions on calculating medical insurance payments and claims issued.

b) Violations by Persons Other Than Insurance Companies and Insurance Service Providers:

Fine (Thousand JD)	Item	Violation
200	1	Any person practicing any of the activities of insurance companies or reinsurance companies within the Kingdom without obtaining a license.
75-150	2	Any unlicensed person practicing insurance activities using in their papers, documents, and advertisements any word or phrase in any language indicating the practice of any of those activities or services without obtaining a license or prior written approval from the Central Bank for this purpose.
5	3	Any person practicing the activities of an insurance agent without a license.
15	4	Any person practicing the activities of a loss adjuster or adjuster without a license.
15	5	Any person practicing the activities of an insurance broker without a license.
15	6	Any bank practicing the activities of authorized insurance without a license.
40	7	Any person practicing the activities of a reinsurance broker without a license.
40	8	Any person practicing the activities of statutory audit or insurance consultancy without a license.
100	9	Any person practicing the activities of an insurance asset management company without a license.
100	10	Any person practicing the activities of a claims adjuster without a license.
5-50	11	Any person using in their papers, documents, and advertisements any word or phrase in any language indicating the practice of any of the activities of insurance service providers without obtaining a license or prior written approval from the Central Bank for this purpose.
5-25	12	Violation by any person obligated pursuant to the provisions of Article (38) of the Law of any of their obligations in accordance with the provisions of the Law, regulations, or instructions issued pursuant thereto relevant to their work.
25-50	13	Any employee in an insurance company representing any shareholder in the company without a legal justification entitling them to do so.

Article (5)
When determining the amount of the fine to be imposed, the Central Bank shall take into account any aggravating or mitigating circumstances in determining the amount of the fine imposed, taking into account:
a) The nature of the violation, the speed of its discovery, and the promptness of the violator in providing the necessary or required information without delay, obstruction, forgery, or alteration. b) The duration of the violation despite the Central Bank's warning, the seriousness of the violation, and the duration of the violation despite the Central Bank's warning. c) The violation committed previously by the violator of the violation or similar violations. d) The compliance program and internal control systems implemented by the violator and their impact on the occurrence of the violation, the time of discovery of the violation, and the effectiveness of the violator's program and systems. e) The amount of loss or damage and its percentage of the violator's assets. f) The impact of the violation, such as the loss incurred by the violator. g) The severity of the violation or its lack of seriousness that led to the occurrence of the violation and its impact on the trust of the policyholder in the insurance company, specifically and the insurance sector in general. h) The date of the violation reported previously by the violator, including:
-1 The date the violator reported the violation.
-2 The date the violator took corrective actions regarding the violation and the time of the violation before the reporting date or after it. i) The duration of the violation and the frequency of its commission before its discovery by the Central Bank or before the warning expected of it. j) The amount of profit achieved or any benefit or gain in any form by the violator or persons with a relationship to the violator.

Article (6)
In the event that the Central Bank decides to impose a fine on an insurance company or any of its employees, agents, or representatives, or a person other than an insurance company and insurance service providers for violating the provisions of the Law or any of the regulations, laws, and decisions issued pursuant thereto, or if it is established that an insurance company or any of its employees, agents, or representatives has conducted business without a license or in an unauthorized or unapproved manner, or has insured them, without committing the violations described in Article (4) of these instructions, then, taking into account any aggravating or mitigating circumstances described in Article (5) of these instructions, the Central Bank shall impose a fine that does not exceed the minimum and maximum amounts stipulated in the Law.

Article (7)
For the fine mentioned in Article (4) of these instructions, in the event that the violator commits the violation again within a period of one year from the date of the last violation, the amount of the last imposed fine shall be doubled, provided that it does not exceed the maximum amount stipulated in the Law.

Board of Directors of the Central Bank