Another insurance company has been unionized in recent days, and others are moving in that direction. As of now, a collective work agreement has been signed at three insurance groups: Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL), and recently also AIG Israel. These developments have occurred, among other things, against a backdrop of several employment characteristics in the insurance industry, which features very generous salary norms for its executives. On the other hand, there are many thousands of clerks on the junior and medium levels whose conditions are much more modest, with salary figures close to the average wage and significantly lower than the average in the banking sector.
There were 23,518 workers in the insurance sector at the end of 2014 earning an aggregate NIS 5.29 billion in salary and benefits, compared with 22,997 workers in the insurance groups - including pension business, finances, agencies, and other activities owned by them - in 2013 earning an aggregate NIS 5.26 billion. In other words, the number of employees rose by 2.3% while aggregate salary expenses were up only 0.6%, while the after-tax profit in the sector fell 28% in 2014, compared with 2013.
The average salary cost of the 10 highest paid insurance executives totaled NIS 6.2 million in 2014, while the average salary cost of employees in the sector, including the multi-million shekel salaries of senior executives, which pushes up the average, totaled NIS 225,000 in 2014, 3.6% of the pay of the 10 highest-paid executives. Another way of looking at this is that the salary of the highest paid executives in 2014 was almost 28 times the average salary of employees in the sector. The average salary cost of the 15 highest paid insurance executives was NIS 5.6 million, still very high in comparison with the average salary in this profitable sector.
The picture is better than in 2013, when the 10 highest paid executives had much higher salaries. The average salary cost of employees in 2013 was NIS 229,000 (NIS 19,100 per months) only 2.5% (one fortieth) of the average annual salary cost of the 10 highest paid executives.
These figures include both employees earning NIS 5,000 a month and executives earning millions. There are over 100 executives in the insurance sector with a salary cost of over NIS 1 million.
In any case, the number of insurance employees grew in 2014 (not including monoline companies that do not work with the public in a variety of insurance branches, as "ordinary" commercial companies do). As of the end of 2014, there were 23,500 employees in the 13 insurance groups dealing in a variety of insurance branches, compared with 22,200 employees at the end of 2012.
These employees earned an average of NIS 18,741 a month in 2014. Net of employers' expenses unseen by the employee, the average salary cost reflected in gross (pre-tax) salary was about NIS 11,500 per month.
These averages are not completely accurate, but they give a very good idea of salaries in the sector, and include all those paid salaries, from the highest to the lowest paid, veteran and young workers, workers in insurance and workers in finance, and even workers in a few overseas companies.
This year's list is led by companies that are neither among the largest in the sector, nor those using direct marketing. In cost terms, the list is headed by Bituach Haklai Central Cooperative Society, Hachshara Insurance Company, and Shlomo Insurance Company (the latter's average is misleadingly high because of the payment given to its former CEO). These three companies employed a total of "only" 656 employees.
The average salary cost at the five largest insurance groups is less than NIS 20,000 a month, while it can be said in general that their executives receive the highest pay in the sector. Ayalon Holding Ltd. (TASE: AYAL) and the two direct insurance companies - IDI Israel Direct Insurance Ltd. (TASE: DIFI) (which sells insurance directly to the public) and AIG Israel - have the lowest average salaries in the sector, other than Shirbit, a small company with an average salary cost of NIS 14,700 per employee.
Finally, in contrast to insurance executives, many of whom passed their banking sector colleagues in the last year on the salary scale, insurance industry employees in general are far below their counterparts in the other major financial sectors.
The average salary cost of the 45,399 employees at the five largest banks totaled NIS 30,500 a month in 2014, compared with NIS 30,700 a month in 2013. At the five investment houses that published financial statements (Meitav DS Holdings Ltd. (TASE:MTDS), Excellence Investments Ltd. (TASE: EXCE), Poalim IBI Underwriting and Investments Ltd. (TASE:PIU), Yelin Lapidot, and Analyst IMS Investment Management Services Ltd.), the average monthly salary cost was NIS 24,500, 8% more than the NIS 22,600 monthly average in 2013.
Published by Globes [online], Israel business news - www.globes-online.com - on April 8, 2015
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