Compulsory car insurance premiums to fall March

The cut in premiums for the coming year will be 17%, amounting to an average of NIS 250.

The new lower premium for compulsory insurance for private cars will come into effect on March, Israel's Ministry of Finance announced today. Last November, Minister of Finance Moshe Kahlon and Supervisor of Capital Markets, Insurance and Savings Dorit Salinger announced the lowering of prices as part of a reform in the compulsory insurance market.

As the first step in implementing this reform, the new compulsory insurance policies can be purchased on the insurance company pool website from February 1, or by phone or at branches throughout the country.

These measures will lower the cost of compulsory auto insurance for 850,000 private vehicle owners (about 50% of all private vehicle owners) by substantial amounts, mainly for young drivers and drivers of cars with life-saving safety systems. The measures, which are slated to go into effect gradually this year will bolster competition in the sector, reduce reciprocal subsidizing among policyholders, and adjust the risk to the price of the insurance. Since the reform in the sector in 2003, compulsory insurance premiums for the public have dropped 35%, saving the public a cumulative NIS 15 billion. "The actions we are taking in the compulsory insurance market are designed to prevent exploitation of the public. We have announced that we will intervene wherever there is market failure," Kahlon stated. "Israel obligates people to buy compulsory auto insurance, and we must therefore make sure that the public receives a fair price and good service. The insurance market annual turnover is NIS 5 billion, while the companies' profit is 20%. We have said yes to a reasonable profit, but no to greed."

According to this plan, the cut in premiums for the coming year with be 17%, amounting to an average of NIS 250. The cut will be 13% in the second year, an average of NIS 200, and 5%, an average of NIS 50, in the third year.

Compulsory car insurance covers drivers in the event of injury to themselves, their passengers, other vehicles and their passengers and pedestrians.