The entry of credit card companies Max and Isracard into the sale of insurance to the general public is supported by the responsible regulator, the head of the Capital Markets, Insurance and Savings Authority, Moshe Bareket, and also by Michal Halperin, head of the Competition Authority. The move is vehemently opposed, however, by the Israel Insurance Agents Association, headed by Lior Rosenfeld.
Max and insurance company AIG Israel are reportedly at an advanced stage of the process of obtaining regulatory approval for forming a joint agency.
Several members of the Knesset Finance Committee, including its chairperson, MK Oded Forer, called on the Capital Markets, Insurance and Savings Authority to defer the process of approving insurance agencies of the credit card companies at least until a new government is formed. The committee session was held against a background of pressure by the Israel Insurance Agents Association to prevent the entry of such strong competitors into the market, and after Bareket stated in a strongly worded letter to Forer that he had sole authority to approve the establishment of insurance agencies by the credit card companies.
"Boosting competition, particularly through the addition of objective agents, will considerably serve the public interest," Bareket wrote.
This morning, Bareket said in the committee, "The public deserves greater competition, and this will have an effect on commissions and information… progress can't be halted… We have taken into account both sides of the equation, and in a very balanced way. Our intention is to allow credit card companies to enter into simple products such as general insurance and niche products where we want greater know-how, and not into complex products such as health and long-term savings where the agents have an advantage, and at this stage they will not go into these areas."
Halperin told the committee, "In all my years at the Competition Authority I have never come across a guild or interest group that was happy that its market was being opened up to competition. When it happens, they campaign against it, and that produces grievances, and this time is no different. In the end, we have to consider the good of those who buy insurance and the consumer, and their good is lots of competition and a variety of products. If the insurance agents are confident in their product and service, fine, let them offer it and the others will fail. There is no reason to prevent the credit card companies, if they present an advantage for the consumer and the customer, from making use of their data. I think that these data should be available to all. We are currently promoting open banking, and that will put the insurance agents on a level footing. This will benefit the consumer, and I am very much in favor of enabling more players to come in and sell insurance."
Rosenfeld was also present at the session. "Who has stopped the public from liquidating its pension funds?" he asked. "The people at the Finance Ministry? The people at the Competition Authority? The insurance agents. Bareket says that he will allow the credit card companies to sell simple insurances - what does that mean, a simple insurance product? The insurance agents are small businesses in Israel, and is this the time, with the coronavirus, when the insurance agents are buckling under the load, to bring in these great bulldozers, in the shape of the credit card companies, to compete with the small insurance agents? Where are the feelings and the empathy?"
Rosenfeld also said that the credit card companies came with data that others did not have, which would give them power. He said he had met the prime minister and raised the matter with him.
Published by Globes, Israel business news - en.globes.co.il - on May 4, 2020
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