Minister of Finance Moshe Kahlon is taking action to make mortgage life insurance cheaper. The Ministry of Finance Capital Markets, Insurance, and Savings Division today published draft regulations setting for the first time a ceiling for agents' commissions paid for mortgage life insurance. "This measure is expected to lower the cost of mortgage life insurance and provide relief for apartment buyers," the Ministry of Finance's announcement said.
The revised regulations set the maximum commission rate for marketing mortgage life insurance policies at 20% of the premium, compared with 40% at present. The banks require mortgage takers to purchase life insurance policies. A large proportion of these policies are marketed by insurance agencies of the banks themselves.
Simultaneously with the new regulations taking effect, Supervisor of Capital Markets, Insurance, and Savings Dorit Salinger is expected to publish a life insurance calculator facilitating price comparisons between different companies. These complementary measures are aimed at bolstering competition in the sector and reducing the price of insurance.
"We're taking action to reduce the monopoly tax paid by consumers in Israel, and to increase competition in the insurance sector," Kahlon said. "Making life insurance cheaper is another step in a series of measures we plan to institute in the near future in order to achieve these goals. As I've said before, we'll introduce competition wherever there is overconcentration. Competition is the consumer's best friend, and the best way of lowering prices."
Salinger added, "Cutting commissions, combined with the expected publication of a life insurance calculator, will increase competition and cut mortgage life insurance costs."
Published by Globes [online], Israel business news - www.globes-online.com - on June 17, 2015
© Copyright of Globes Publisher Itonut (1983) Ltd. 2015