Best’s Special Report: Jordan Insurance Ratings: Benchmarking
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.
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.
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.
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Source: AM Best
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