The Association of Insurance Brokers and Agents in Israel is negotiating with a foreign insurance company. The company has proposed that insurance agents create a corporation for marketing their life insurance policies. Association President Zeev Winer, who reported the negotiations today, believes the company’s policies will be better than those issued by Israeli insurance companies.
Winer did not identify the foreign company, but hinted it is active in Israel. Various foreign insurance companies are active in Israel, mostly as reinsurance brokers.
It should be kept in mind that any foreign company wishing to market its life insurance policies in Israel must be approved by the Supervisor of Insurance. The company will be required to deposit tens of millions of shekels and provide additional guarantees. A number of foreign companies have in recent years attempted to market life insurance policies in Israel. For various reasons, these attempts have not gotten off the ground to date.
Winer also commented on the insurance companies’ demands that agents return a large part of their excess life insurance commissions when insured parties cancel their policies in the first five years. He said the Association is negotiating a proposal to change the refund method with one of the large companies, under which the sums to be returned by the agent will be lower than currently demanded by the companies.
The companies are currently demanding the return of 20-80% of the excess commission up to the date of the cancellation. Winer said he believes that this is only the companies’ initial position, and that terms more favorable to the agents would be agreed to in negotiation in the coming weeks.
A senior insurance company source responded, “There's no justification for an agent receiving a large commission on a cancelled insurance policy. Companies should have gone over to the new system a long time ago.” Migdal Vice President Dan Cahal told “Globes” that he does not believe companies will insert significant changes concerning refunds of commissions.
Insurance agent Eli Ehrlich, one of the candidates for the Association presidency, said, “The Association has known of the expected changes for six months and has done nothing. The Association wasn't a factor; instead of leading, it was led. Had the Association devoted 10% of the attention it directed towards compulsory auto insurance to this matter, our situation today would have been incomparably better.”
Published by Israel's Business Arena on June 26, 2001