Financial Crime World

Jordan’s Financial Regulatory Bodies Emerge as Key Players in Insurance Sector

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In an effort to regulate and oversee the Jordanian insurance industry, three prominent bodies have emerged as crucial players: the Insurance Directorate, International Association of Insurance Supervisors (IAIS), and Jordan Insurance Federation (JIF). These regulators work together to ensure the sector operates within a framework that prioritizes stability and transparency.

Key Regulatory Bodies

Insurance Directorate

The Insurance Directorate is a department of the Ministry of Industry, Trade and Supplies, responsible for overseeing the insurance industry. Its powers derive from the Insurance Regulatory Act 1999, which governs insurance operations and mediation in the country.

International Association of Insurance Supervisors (IAIS)

The IAIS is a global organization that represents insurance regulators and supervisors worldwide. It plays a crucial role in shaping regulatory policies and ensuring compliance with international standards.

Jordan Insurance Federation (JIF)

The JIF plays a crucial role in promoting the interests of insurance companies operating in the country. Its involvement has been instrumental in shaping regulatory policies and ensuring compliance with international standards.

Compulsory Insurances

Five key compulsory insurances are mandatory for entities operating within the Jordanian insurance industry:

  • Motor Third-Party Liability Insurance
  • Aviation Liability Insurance
  • Marine Liability Insurance
  • Professional Indemnity Insurance
  • Social Security Insurance

These policies provide essential coverage against unforeseen events and help maintain financial stability.

Taxation Regime

The taxation regime in Jordan is complex, with a range of taxes applicable to insurance companies operating within the country. The key taxes include:

  • Tax on Insurance Premium
  • Corporate Income Tax
  • Corporate Capital Gains Tax
  • Value Added Tax

These taxes are administered by the Income Tax and Sales Tax Department.

Scope of Non-Admitted Insurance Limited

Non-admitted insurance is prohibited in Jordan, except for aviation insurance covering aircraft owned by local companies. This move aims to maintain financial stability and prevent potential risks to the sector.

Key Highlights

  • The Jordanian insurance industry is regulated by the Insurance Directorate.
  • Motor third-party liability, workers’ compensation, liability for ships with respect to oil pollution, and aviation liability insurance are mandatory classes of insurance.
  • Composite insurance is not permitted, except for existing composite insurers prior to the enactment of the Insurance Regulatory Act 1999.

Conclusion

Jordan’s financial regulatory bodies have played a vital role in shaping the country’s insurance sector. The Insurance Directorate, IAIS, and JIF work together to ensure compliance with international standards and maintain stability within the industry.