Five Israeli Insurers to Pay Hundreds of Millions in Class Action Settlements

After 13 years of legal proceedings, five major Israeli insurance companies are set to pay hundreds of millions of shekels to policyholders and beneficiaries as part of class action settlement agreements. The agreements, submitted last week to the Tel Aviv District Court for approval, aim to resolve five class action lawsuits filed in 2013 against Clal, The Phoenix, Migdal, Harel, and Ayalon. The lawsuits centered on the issue of interest that was allegedly not added to insurance payouts by the companies, despite the plaintiffs' claim that Israeli insurance law mandates such interest be added 30 days after a claim is submitted.

The core dispute revolved around the precise starting date for calculating this interest. The insurance companies argued that the clock started ticking from the day they received the final necessary document to assess the claim, while the plaintiffs contended that interest should accrue from an earlier point. While the total settlement amount has not been finalized, it is expected to reach hundreds of millions of shekels collectively, with each company contributing tens of millions. Harel Insurance alone has agreed to pay NIS 78.3 million as part of its settlement.

This resolution follows a lengthy legal battle that included appeals to the Supreme Court and a partial ruling in 2021 that favored the plaintiffs' claims. An expert was appointed to quantify the damages, and two previous mediation attempts failed before a third, initiated in June 2024, led to the current agreements.

The settlements not only address past claims but also mandate future changes in how interest is calculated on insurance payouts, establishing uniform rules for all five companies. This forward-looking adjustment is estimated to be worth at least as much as the compensation for past damages. The parties anticipate that the earlier accrual of interest will incentivize insurers to process and pay claims more swiftly.