(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
luca.patron@ambest.com
Mahesh Mistry
Senior Director, Analytics
+44 20 7397 0325
mahesh.mistry@ambest.com
Yvette Essen
Director, Research, Communications &
Media – Europe, Middle East & Africa
+44 20 7397 0322
yvette.essen@ambest.com
Edem Kuenyehia
Director, Market Development & Communications
+44 20 7397 0280
edem.kuenyehia@ambest.com
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