Phoenix Insurance to Pay $20 Million in Compensation for Delayed Payouts

The Phoenix insurance company will pay 74 million shekels (approximately $20 million) in compensation to its customers following a court-approved settlement. The company was found to have illegally delayed insurance payouts, withholding legally mandated interest payments on claims that were settled more than 30 days after submission.

The class-action lawsuit, initially filed against Phoenix, also included other major Israeli insurance firms: Harel, Menora Mivtachim, Migdal, and Clal. The plaintiffs alleged a widespread practice where insurance companies consistently failed to add the legally required interest to delayed compensation payments, allowing the funds to remain with the insurers for extended periods.

The new agreement not only compensates past claimants but also establishes a new mechanism for future interest payments on delayed claims, ensuring policyholders receive their due interest moving forward. This change is expected to significantly alter how insurance companies handle delayed payouts in Israel.

Lawyers for the plaintiffs are set to receive 15.5 million shekels (before VAT) in legal fees from the settlement. Despite the substantial payout, Phoenix assured investors that the financial impact would be minimal, as the company had already set aside the necessary funds in its accounts.