Insurance laws Jordan
Jordan has a developed and regulated insurance sector, with a legal framework designed to promote stability, protect policyholders, and ensure the sound operation of insurance businesses.
I. Regulatory Authority:
Central Bank of Jordan (CBJ): Since June 15, 2021, the Central Bank of Jordan (CBJ) has assumed the oversight and supervision of the insurance sector. This transfer of authority from the former "Insurance Directorate" (a department of the Ministry of Industry, Trade and Supplies) to the CBJ aims to enhance regulatory frameworks and align with international best practices. The CBJ is responsible for:
Licensing and authorizing insurance and reinsurance companies.
Setting prudential standards, including capital, solvency, and reserve requirements.
Monitoring the financial health and stability of insurers.
Regulating the conduct of insurance business, including product approvals and claims handling.
Supervising insurance intermediaries (agents, brokers, adjusters, actuaries).
Implementing anti-money laundering and counter-terrorism financing measures within the sector.
Jordan Insurance Federation (JIF): While the CBJ is the primary regulator, the Jordan Insurance Federation (JIF) plays a significant role as a professional body representing insurance companies in Jordan. It contributes to the development of the sector, offers services, and works with the CBJ on legislative proposals.
II. Key Legislation:
Insurance Regulatory Act No. 12 of 2021: This is the most recent and significant piece of legislation governing the insurance sector in Jordan. It replaced the previous Act No. 33 of 1999 and reflects the shift in regulatory oversight to the Central Bank of Jordan. Key aspects of this Act include:
Strengthening corporate governance requirements for insurance companies.
Enhancing the financial solvency of insurers.
Setting clear and transparent standards for oversight.
Regulating procedures for the establishment and operation of insurance businesses.
Defining regulatory requirements for the separation between life insurance and general insurance operations for companies offering both.
Establishing rules for the legal and regulatory framework of Takaful (Islamic insurance) companies and strengthening the role of Sharia supervisory bodies.
Civil Liability Compulsory Motor Insurance Regulation: This regulation specifically governs mandatory motor third-party liability insurance in Jordan.
Commercial Act No. 12 of 1966: Contains provisions related to insurance contracts, particularly concerning transportation contracts.
Companies Act No. 22 for the year 1997: Addresses aspects related to the incorporation and capital requirements of insurance companies.
III. Key Aspects of Jordanian Insurance Law:
Licensing and Authorization: Only companies authorized and licensed by the Central Bank of Jordan can conduct insurance business in the Kingdom.
Foreign Direct Investment (FDI): Jordan generally permits up to 100% foreign direct investment in its insurance industry. Foreign insurance companies can operate through a branch registered in the Kingdom.
Separation of Life and General Insurance: The law generally mandates the separation of life insurance and general (non-life) insurance businesses for newly established companies. However, composite insurers that existed prior to the enactment of the Insurance Regulatory Act 1999 may continue to operate.
Non-Admitted Insurance: Non-admitted insurance (insuring a risk in Jordan with an insurer not licensed in Jordan) is generally prohibited. A notable exception exists for aviation insurance for aircraft owned by Jordanian companies.
Policy Language: Insurance policies must be issued in Arabic. Translations into other languages are permitted.
Policy Wordings & Rates: The CBJ (formerly the Insurance Directorate) approves policy wordings. There are no tariffs other than for compulsory classes of insurance.
Reinsurance: While there are no stand-alone reinsurers in Jordan, the market benefits from the participation of regional and international reinsurers.
Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT): Insurance companies are subject to AML/CFT regulations and are required to implement measures to prevent and detect illicit financial activities.
IV. Mandatory Insurance Classes:
Jordanian law mandates several types of insurance to protect individuals and the public interest:
Motor Third-Party Liability (TPL) Insurance: This is compulsory for all vehicles in Jordan. It covers bodily injury and material damage to third parties arising from vehicle use. The Jordan Insurance Federation (JIF) operates a Unified Office and various offices at licensing departments to issue these policies.
Workers' Compensation Insurance: This is a mandatory social security scheme administered by the Social Security Corporation, providing benefits for work-related injuries, illnesses, and death.
Liability for Ships with Respect to Oil Pollution: Given Jordan's maritime activities, this type of liability insurance is compulsory.
Aviation Liability Insurance: This is mandatory for aircraft operators.
Professional Indemnity Insurance: Compulsory for certain professionals, including insurance brokers, reinsurance brokers, insurance consultants, and building consultants to the Ministry of Housing and Works.
Imported Cargo Insurance: Generally required to be insured in Jordan.
Public Liability Insurance for Hotels and Restaurants: Often required.
Clinical Trials Liability Insurance: Required for clinical trials.
V. Travel Insurance for Visitors to Jordan:
While some sources might state it's not strictly mandatory, it is now required for all visitors to Jordan to have a valid health insurance policy for the duration of their stay. This requirement often includes coverage for COVID-19. It is highly recommended to obtain comprehensive travel insurance that covers not only medical emergencies and evacuation but also trip cancellation/interruption and lost/delayed baggage.
For the most up-to-date and specific legal advice, it is always recommended to consult with the Central Bank of Jordan or legal professionals specializing in Jordanian insurance law.
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