Kahlon reform to slash automobile insurance prices by as much as 65%

“The reform will end the exploitation of the public in the compulsory insurance market,” Kahlon said.

November 23, 2015 00:40
1 minute read.
netanyahu kahlon

BENJAMIN NETANYAHU and finance minister Moshe Kahlon.. (photo credit: REUTERS/BAZ RATNER)


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Finance Minister Moshe Kahlon and the ministry’s Supervisor of Capital Markets Dorit Salinger announced a plan on Sunday to cut compulsory auto insurance rates by as much as 65 percent.

“The reform will end the exploitation of the public in the compulsory insurance market,” Kahlon said.

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The reforms target pricing in “Pool,” a corporation owned jointly by Israel’s insurance companies that was created to provide policies to high-risk drivers who could not get insurance on the private market.

The plan goes into effect gradually starting in 2016, and aims to boost competition in the market by reducing the premium some drivers pay to subsidize others.

It will also allow insurance providers to incentivize careful driving by allowing good drivers to receive refunds at the end of their insurance period.

Further, it ensures that drivers with the same risk assessment are offered the same rate. Under the plan, drivers may save from 10% to 50% on insurance costs. Drivers who use early-warning technology will be eligible for an additional discount of as much as 15%.

Some 850,000 drivers who rely on Pool insurance – about half of all private vehicle drivers – will wind up with discounts.


Kahlon said the car insurance market turns over some NIS 5 billion a year and clears a profit of around 20%.

The Finance Ministry estimated that the average cost of Pool insurance, which is now the highest in the market, for an 18-year-old whose car has an ESP (Electronic Stability Program) and airbags but no ABS (Anti-lock Breaking System) would fall from NIS 3,771 to NIS 3,091.

Adding a warning system would reduce the price further to NIS 2,673. In some cases, the discount would be even more dramatic since Pool prices have run as high as thrice the market standard. The reform would bring these prices in line with private policies.

According to Kahlon, an earlier reform in 2003 helped reduce mandatory insurance prices 35%, which has saved the public a cumulative NIS 15 billion.

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