The Insurance Industry in Israel

1. STATE OF ISRAEL MINISTRY OF FINANCE The Insurance Industry in Israel

2. Market Overview Market Structure 25 domestic insurers 2 foreign insurers 12 non-life only. 13 composite 5 insurance groups : 95% of life premiums; 75% of non-life premiums;

3. Foreign ownership of domestic insurers: 20% 60% 51% 100% Largest Life Insurer Composite insurer Mortgage Insurance Insurer Credit Insurance Insurer

4. Market Outline - 2003 • Net earnings- $US600 million; • Owners’ equity - $US 1.7 billion; • Insurance liabilities - $US 29.1 billion; • Return on equity - 5 years average 27.5%;

5. Market Development Average annual growth of assets – 11% 13

6. 7 4.8 3.9 2.8 2 3.1

7. 6.3% 6.3% 3.5% 3.5% 2.8% 2.8%

8. 1,033 $ 875$ $576 525$ 350$ $458

9. Regulation Framework Main laws: Insurance business supervision law Insurance contract law Insurance Regulations Commissioner's Circulars

10. Insurance Business SupervisionLaw Licensing keeping insurer’s solvency Consumer protection Business supervision Minimum capital Financial reports Investment Technical provisions Reports requirements

11. Commissioners’ Goals To assure optimal security to consumers of the financial services – insurance, provident funds and pension funds.

12. Recent reforms and current initiatives • Institutional level – solvency, liberalization and market governance; • Consumer level – transparency and fairness, competition;

13. Institutional level- • since 2001-liberalization of investment regulations; • The role and appointment of an actuary: • Require each insurer to appoint an actuary; • Actuary law.

14. Insurer’s risks assumption model – modeled on the Canadian version. • Insurance fraud- • A private operated, central database is be established for motor bodily injury;

15. ``` • Consumer level – • Automobile liability insurance- • Assumption of all pricing risk by private insurer; • Premium rates vary by automobile and driver characteristics; • Premium rates vary from insurer to insurer;

16. Life Insurance – transparency of premium paid by the insured: • Risk; • Savings ; • Expense charges;

17. Long-Term Care – • Mission Assure that private long-term-care insurance will continue to be widely affordable to Israeli residents including senior citizens.

18. Group policies – In case of termination of the cover, option to join individual policy without evidence of insurability. • Individual policies – Provide premium rates that do not vary by age after 65; • Benefit triggers – not more than the Inability to perform 3 activities of daily living or cognitive impairment;