POL I CY The Israeli Insurance, Pension & Finance Newspaper 17 Special edition 2022 fall compared with last year. The 2021 result could be a forerunner of the 2022 results. This year’s motor property activity will be influenced mainly by the underwriting activity in 2021, despite the tariff corrections upwards that started being carried out in the second half of the year. The sectorwhich ledearnings is other property and others (mainly home and businesses), contributing 53% of total elementary sector earnings (722.5 million shekels). Exceptional investment profits succeeded in producing unusual earnings in the liabilities sector (502.8 million shekels) and were stronger than the changes in the cost of living index and in the risk free interest curve (including the illiquidity premium, which moderated the negative impact of the interest curve and the cost of living index). The main source of earnings was professional liability and product liability, whilst the other sub-sectors (employers liabilities and third party) remain problematic from an underwriting point of view. On the other hand, investment profits were able to only reduce the negative impact of the lower interest curve (assisted by the illiquidity premium) and the decrease in underwriting profits. The profit was small – 163.5 million shekels compared with 423.8 million shekels in 2020, but given the massive increase investment profits – the results show that the tariffs are problematic and require immediate correction (and not gradual). Motor property The nominal drop in production in the motor property sector was arrested in 2021, with production reaching 8.717 billion shekels (2020 – 8.364 billion shekels) – a 4.2% increase. The growth in production was mainly the result of growth in the number of new car deliveries (until September) and also the start of a process of an increase in prices, or more accurately a brake on the drop in tariffs that took place constantly during the Corona crisis. Some of the companies started putting up prices in the second quarter, with the rest of the companies joining in the coming quarters and even at the beginning of 2022. The motor property sector, which is the largest elementary insurance sector (36% of total elementary production), is the only one to have posted a combined loss, of 25.9 million shekels. The loss, whilst small, still testifies to us being in a trend of deterioration in underwriting which started already in 2020 but which stopped as a result of the Corona epidemic and the lockdowns that came in its wake. The drop in underwriting profits reached a negative record in 2021 of 1.12 billion shekels, deriving from the increase in motor travel and the consequent increase in claims (including growth in thefts). Comprehensive income went from a situation of number 1 in earnings (784.2 million shekels) to a 25.9 million shekel loss – a drop of 810.1 million shekels in earnings. We expect this negative trend to continue in 2022 until the positive impact of the underwriting improvements (including higher tariff) is felt. Menorah Mivtachim Holdings was the top producer (1.408 billion shekels), with Direct Insurance topping the earnings rankings (123.6 million shekel profit). Splitting off Shomera from Menorah results in it being also the biggest producer. 10 of the 14 companies posted an underwriting loss, and 7 companies posted a comprehensive loss. The sector is not reinsurance rich (only 936% of gross production), but it impacted positively on the results of some of the companies. Compulsory motor The compulsory motor sector is the third largest (this year – coming in behind the other property and others sector) with production totaling 5.543 billion shekels – up 4.7% relative to the previous year (5.295 billion shekels). The sector makes up 22.9% of the elementary sector as a whole and the decrease is explained by the gradual drop in compulsory motor tariffs over the years (in addition to the growth in share of liabilities in the elementary sector). A process of higher tariffs has commenced in the compulsorymotor sector (starting in the current year) but the process is slow and gradual and a long way off outweighing the negative changes affecting the sector. Comprehensive income is down, at 163.5 million shekels, compared with last year’s total of 423.8 million shekels – a 61.4% drop, but still in positive territory. The growth in investment profits, from 0.332 billion shekels last year Continued on the next page Elementary sector results in 2021 (million shekels) compared with 2020 Sector Gross premiums Investment profits Earnings net of investment profits Comprehensive income Change in production Change in investment profits Change in earnings net of investment profits Change in comprehensive income Compulsory motor 5,543 1,222 -1,058 164 248 5% 890 268% -1,150 -260 -61% Motor property 8,718 443 -469 -26 353 4% 310 232% -1,120 -810 from profit to loss Other property and others 5,669 169 55 723 339 6% 113 203% 155 268 59% Liabilities 4,182 1,117 -615 503 517 14% 789 240% -618 171 51% Grand total 24,112 2,951 -1,588 1,363 1,456 6% 2,102 247% -2,733 -632 -32% Sector Gross premiums Investment profits Earnings net of investment profits Comprehensive income Compulsory motor 5,295 332 92 424 Motor property 8,365 133 651 784 Other property and others 5,330 56 399 455 Liabilities 3,665 328 3 332 Grand total 22,655 850 1,145 1,995 2021 General insurance sector results (million shekels) Investment Earnings net of Insurance companies general insurance results 2021 (million shekels)
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