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Israel Insurance Report 2012
Business Monitor International, Nov 2011, Pages: 48
Business Monitor International's Israel Insurance Report provides industry professionals and strategists, corporate analysts, insurance associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Israel's insurance industry.
Israel’s complex geo-political history is reflected in the structure of the insurance sector. Although the trade associations identify 14 different players, the majority of the market is controlled by five large and complex groups – Clal, Harel, Menorah, Migdal and The Phoenix. Each of these is listed, with interests in non-life insurance, life insurance, health insurance and pensions. In most cases, they have associations with one or other of Israel’s banks. They are each generally the result of a series of mergers and acquisitions over the years: the consolidation process is basically complete. With two important exceptions – Generali, the main shareholder of Migdal and Chartis – foreign groups have tended not to seek opportunities in Israel, perhaps out of fear of jeopardising relationships in larger and/or more rapidly growing markets in other parts of the Middle East and North Africa.
The apparent lack of potential buyers of insurance businesses from outside Israel has interesting implications for IDB Group, the conglomerate controlled by super-tycoon Nochi Dankner which is the main shareholder in Clal and, perhaps, for Delek Group, which controls The Phoenix. Financial pressures and the government’s determination to reduce the control of the large conglomerates over both financial services and the real economy mean that IDB and Delek are, respectively, actual and potential sellers of their insurance businesses. As of late October 2011, negotiations between IDB and Permira in relation to a potential sale of Clal. Meanwhile, the earnings of the insurers have suffered as a result of volatility in global and local financial markets through H211.
Even though the insurers are able to benefit from the growth in organised pensions in Israel, the challenges that they face are numerous. Competition within the non-life segment is intense – with the result that premiums are not growing. Meanwhile, regulatory changes are adding to the insurers’ costs and are reducing their bargaining power relative to their customers.
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