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Insurers burdened by 3rd party policies.

... AMMAN (Star)--The Jordan Insurance Federation (JIF) held a press conference on Tuesday to announce the financial results of the insurance sector for the year 2006. President of JIF Wassem Zurub said that in 2006 the profits of 26 insurance companies reached JD21 million including investment profits. The total profits of those 26 insurance companies working in Jordan reached JD206.6 million in 2006, an increase of 58.1 percent over 2005. He added that the insurance sector is having difficult problems as 10 companies had returned losses in all insurance types in 2006, while 11 companies lost JD16 million in Auto insurance in the same year: JD13.5 million in the 3rd party liability "Compulsory insurance", and JD2.5 million for Comprehensive insurance. Zurub attributed the loss in this sector to the over-estimation of car accident damages, and to intentional car accidents--not less than 30 percent of all accidents are intentional. Such accidents waste money, time and effort, and the first reason for the loss is the massive increase in number of cars, almost 700 thousand cars are in the streets, and the average of car accidents is 62,000 per year. Zurub added that the insured pays only JD55 a year for a 3rd party policy while the average car accident cost rose from JD282 in 2001 to JD789 in 2006; this is how the loss in this sector could best be explained.One of the solutions that Zurub suggests is to bring a global expert to do a study on the Compulsory insurance to find the right payment that the insured has to pay annually so as to strike a balance with the cover of assurance. Such a solution would give the insurance companies a chance to remain afloat by keeping their profit or loss in this category within an acceptable range. The study will be ready within 1-2 months, Zurub concluded. nInsurers burdened by 3rd party policies

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Publication:The Star (Amman, Jordan)
Date:Jun 18, 2007
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