Harel Insurance to Pay Millions in Class Action Settlement Over Delayed Payouts

Harel Insurance Company is set to pay out tens of millions of shekels to policyholders as part of a proposed class action settlement, potentially totaling 78.3 million shekels. The settlement addresses claims that the company delayed insurance payouts, thereby failing to pay policyholders the interest owed to them by law. The legal proceedings began in 2013, and after more than a decade of litigation and mediation, a compromise agreement has been submitted to the Tel Aviv District Court for approval.

The core dispute centered on when the 30-day period for insurance companies to pay claims begins. While the law stipulates interest accrues if payment isn't made within 30 days of a claim submission, insurers argued this period should only start after all necessary documents were provided. The plaintiffs contended the clock should start ticking from the initial contact with the insurer. The District Court sided with the plaintiffs, a decision later upheld by the Supreme Court.

Under the proposed settlement, eligible recipients include policyholders, beneficiaries, and third parties who received insurance payouts from Harel between May 16, 2010, and the final approval date, and who did not receive the legally mandated interest. The distribution of the 78.3 million shekels will be based on a calculation mechanism considering the delay duration and the payout amount, meaning longer delays and higher payouts could result in larger compensation.

Beyond the direct compensation, the settlement also aims to improve future claim handling. Insurance companies will be required to more clearly publish the documents needed to initiate the 30-day payment clock, with tables detailing basic information requirements for different claim types. This aims to prevent situations where policyholders face lengthy delays only to discover later that missing documents, according to the insurer, had stalled the process.

The total estimated benefit to the public from this settlement is approximately 133.1 million shekels, comprising the 78.3 million shekels for past compensation and an estimated 54.8 million shekels attributed to anticipated changes in future claim processing. The settlement also includes proposed fees for the representative plaintiffs and their legal counsel, totaling around 3.25 million shekels and 13 million shekels respectively, to be paid by Harel in addition to the policyholder compensation.