Insurance laws Israel
Israel's insurance landscape is sophisticated and highly regulated, aiming to protect consumers and ensure the stability of the financial system. The primary legislative frameworks governing insurance in Israel are:
The Insurance Contract Law, 1981: This law specifically governs the formation, content, and execution of insurance contracts. It sets out requirements for written policies, the insurer's obligations, and the rights and duties of the insured. Key provisions often address issues like misrepresentation, disclosure, claims procedures, and the statute of limitations.
The Control Over Financial Services (Insurance) Law, 1981: This law focuses on the regulation and supervision of insurance companies and insurance intermediaries (agents and brokers). It sets licensing requirements for insurers and agents, dictates capital adequacy, solvency rules, corporate governance, and outlines the powers of the regulatory authority.
Regulatory Authority
The main regulatory body for the insurance sector in Israel is the Capital Market, Insurance and Savings Authority (CMISA). This independent authority, appointed by the Minister of Finance, is responsible for:
Licensing and Supervision: Granting licenses to insurance companies and intermediaries, and overseeing their operations to ensure financial stability and compliance with the law.
Consumer Protection: Protecting the interests of policyholders, ensuring fair practices, and resolving disputes between insurers and insureds (though CMISA may refrain from deep involvement in fact-laden disputes, encouraging alternative dispute resolution).
Market Stability: Maintaining the stability of the financial institutions under its supervision, including insurance companies, pension funds, and provident funds.
Promoting Competition: Working to increase competition in the insurance industry, which can lead to lower premiums for consumers. This has included measures like reducing minimum capital requirements for new insurance companies.
Innovation: CMISA is also actively involved in providing a regulatory framework for Israel's growing FinTech and InsurTech ecosystem, including licensing digital insurance firms and observing the implementation of B2B/B2B2C InsurTech services.
Mandatory Insurance Types
Several types of insurance are mandatory in Israel:
National Health Insurance: Under the National Health Insurance Law of 1995, all citizens and permanent residents of Israel are mandated to join one of four non-profit official health insurance organizations (Kupat Holim or "Patient Funds"). This system provides a comprehensive "health services basket" which includes a wide range of medical services, listed prescription drugs, and medical devices. Payments are proportionate to income and collected by the National Insurance Institute.
Compulsory Motor Vehicle Insurance (Bituach Chova): This is the sole legally required car insurance for all vehicle owners in Israel. It is a "no-fault" policy that exclusively covers bodily injury to the driver, passengers, and pedestrians in the event of a traffic accident, regardless of who was at fault. It does not cover damage to vehicles or property.
National Insurance (Bituach Leumi): This covers a broad range of social security benefits, including old-age pensions, disability benefits, maternity leave, unemployment benefits, and more. Contributions are mandatory for all residents aged 18 and over, with some exceptions. While not a commercial insurance product, it's a fundamental part of Israel's social safety net.
Other Important Aspects
Insurance Intermediaries: Only licensed insurance agents (the law does not distinguish between brokers and agents) can act as intermediaries between an insured and a licensed Israeli insurer. It is generally prohibited for agents to act as intermediaries with unlicensed insurers.
"Cash Before Cover": While not as strictly applied as in some CIMA countries, the general principle in Israel is that the insurance premium should be paid before the policy becomes effective, though specific terms can vary.
Contractual Provisions: Insurance contracts must be in writing. Any exclusions must be clearly highlighted. The Commissioner of Insurance often issues regulations dictating the wording of certain private policies. Provisions that contradict public policy, are ambiguous, or are misleading are generally prohibited.
Foreign Insurers and Reinsurance: Writing direct insurance business in Israel generally requires a local license. However, Israeli citizens are not prohibited from purchasing insurance from foreign, unlicensed insurers. Reinsurance business by foreign insurers typically does not require a license. Lloyd's underwriters are a notable exception, being permitted to write direct business in Israel under a unique exemption.
Dispute Resolution: While Israeli courts handle complex insurance disputes, alternative dispute resolution (ADR) mechanisms like mediation and arbitration are also common. In certain cases before the Magistrate's Court, mandatory "Mahut" sessions (Information, Introduction, and Coordination) are required to explore mediation.
In essence, Israel's insurance laws aim for a balance of robust regulation to protect consumers
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