POL I CY The Israeli Insurance, Pension & Finance Newspaper 9 Special edition 2022 the general insurance sector could bring the reinsurers back to the Israeli market, many of whom have left as a result of the growing losses in the sector as a whole. What is the source of the distortions in this area? Omid: The compulsory motor sector is the only one combining politics with economics. Managing the compulsory tariff is a political process and is not managed purely actuarially, as a result of the nature of it as compulsory insurance. One of the consequences of this is a shortage of premium. A situation has arisen in some cases that the Pool is actually competing with the insurance companies, losses are mounting up and this needs to be taken care of. What is the situation in the motor property sector? Omid: The sector is changing. Traditional companies are becoming direct, the digital companies have entered the sector, and this is leading to a lowering of prices in the sector. Unlike the usual cycle, where prices in the end start going up, this time something else is happening. At the bottom of the cycle the claims were moved because of the post-Corona events. And then, in mid-2021, there was a significant increase in the number of claims. More thefts, there being no spare parts, vehicles are remaining in the garages and becoming a constructive loss. Just when the premiums are at their lowest, the claims increased by 35%. This is a perfect storm, and one which is not about to change – this is the extent of claims that we are going to need to get used to. But it is easier to increase the tariff in the motor property sector. Omid: Correct, and the gap needs to be closed. In a world without big investment revenues – this is needed more than ever. The investments covered the losses and when they do not exist the gap between the premiums and the claims is clear, and thus the underwriting problem in the sector. How are the electric vehicles affecting the sector? Omid: We are concerned. We estimate that the claims will be more expensive. Whilst there are fewer thefts and damages, because the vehicles are maintained better, but the cost of the battery make the claim very expensive. The sector is guessing the premiums at present, and in currently under-pricing. It will be interesting to see whether, with experience, the price will stabilize. How are you deploying for the arrival of the autonomous vehicles? Omid: We will be there. This is an opportunity for the sector. There will be very interesting legal issues here. It is also not unlikely that the car will come with insurance. There will be insurance arrangements we have never known. What is new in the business insurances area? Omid: We have grown greatly in the business insurance sector. This is our significant growth engine. But I am worried – we are seeing a phenomenon of loss of governmental control, of many areas where businesses are paying protection, and no police presence. When crime increases, the bill is sent to the insurance companies. It is getting worse over time. If no solution is found, the insurance companies will reduce the coverage and/or will exit entire areas and sectors. The State of Israel needs to ensure that there are no areas left without being dealt with, otherwise the insurance companies will suffer one or two losses but in the end they will leave the sector. This is a far from simple national problem. What developments are there in reinsurance? Omid: The reinsurance sector is very dominant in Israel relative to all other countries in the world. There is premium 29 billion shekels a year in general insurance here, a lot of which is reinsurance, mainly for capital release reasons. In the past year some of the reinsurers have been reducing activity in Israel because of accumulated past losses and capacity. Reinsurers lost billions in the floods in Europe, which resulted in a reduction in the supply of reinsurance. Now, when I hope that they are seeing the improvement in premiums – they will return here as the results improve. I have to say that if our partner the reinsure who working on the Israeli market, they can find huge opportunity for the next coming years. the premiumcycle is down deep and it has to, and will be dramatically increasing in all line of business, specifically in MBI motor Casco and property casualty liability, so I feel comfortable to invite most of them during The next year - 2023 and join us to the journey of increasing the premiumwho will certainly improve the result of all the market. what is happening with insurance agents? Omid: Their situation will only improve, because the companies that ran a direct insurance operation based themselves only on a cheap price. As premiums increase, the commission will increase and the competition will be less wild. But the process is disturbing – the big companies are reducing the commission, and the agents are merging into agencies and then the commission becomes more expensive for the companies. The desire of the companies to reduce the premium has only increased it, and the ones benefiting are the agencies. When there will be 4-5 mega agencies in Israel – it will be even tougher for the companies unless they own them.
RkJQdWJsaXNoZXIy MjgzNzA=