LONDON–(BUSINESS WIRE)–The Jordan insurance market remains highly competitive, with pressure on
technical performance accompanied by economic challenges, according to a
new special report by AM Best.
In the Best’s Special Report, titled, “Jordan Insurance Ratings:
Benchmarking,” AM Best notes despite the market showing reasonable
growth rates in recent years, it is also facing a number of challenges.
Pricing pressure on the core business segments and tariffed motor
third-party liability business have hindered operating performance.
Additionally, rising fiscal deficits have led to cuts in government
spending and tax hikes, and the background of social unrest and weakness
in commodity prices is a concern. Furthermore, the widespread lack of
awareness and understanding of insurance and risk mitigation amongst the
population is reflective of the low penetration rate.
Luca Patron, financial analyst, said: “Even though the challenges of the
competitive Jordanian insurance market affected the ratings of some
companies in the past, the overall operating performance of AM
Best-rated companies remains at a good level and above the average
market performance, benefitting from economies of scale and brand
recognition.”
The report states that on a global scale, AM Best-rated Jordanian
insurers are deemed to have a limited business profile. Furthermore,
there are limited opportunities for insurers to grow domestically
without undercutting competitors.
Mahesh Mistry, senior director, analytics, said: “Most have very little
geographical diversification and are predominantly single-market
participants. Moreover, while some companies have moderate
diversification on a gross basis, net premiums are geared toward motor
and medical. The level of product differentiation between participants
is limited, with a lack of innovation and product transformation of new
ideas to change traditional market concepts.”
AM Best’s analysis has highlighted some common themes as weaknesses, the
most important of which is risk governance, with companies adopting
basic or minimum requirements to run their businesses. The buffers that
most insurers had in their risk-adjusted capitalisation have eroded
steadily in recent years. Asset concentrations in high-risk investments
remain a concern and add significant volatility to operating performance
and capital adequacy, while in some cases, insurers have fallen below
local solvency requirements. AM Best believes that the adoption of
prudent risk management practices is critical to ensure that companies
manage their risks effectively and in a controlled manner.
To access a complimentary copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=286042.
AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.
Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.
Contacts
Luca Patron
Financial Analyst
+44 20 7397 0304
[email protected]
Mahesh Mistry
Senior Director, Analytics
+44
20 7397 0325
[email protected]
Yvette Essen
Director, Research, Communications &
Media
– Europe, Middle East & Africa
+44 20 7397 0322
[email protected]
Edem Kuenyehia
Director, Market Development & Communications
+44
20 7397 0280
[email protected]
