Israeli Court Approves Class Action Against Shlomo Insurance

A district court in central Israel has approved a class-action lawsuit against Shlomo Insurance Company, alleging the firm illegally bundled service agreements with comprehensive car insurance policies. The lawsuit claims the company violated financial services oversight laws and directives from the insurance supervisor by including services like windshield repair and towing as an inseparable part of policies, without itemizing their cost or offering customers a choice of at least two service providers.

Plaintiffs argue that Shlomo Insurance, through its agents, deliberately omitted this information to inflate policy prices, preventing customers from opting out of these additional services and thus obtaining cheaper insurance. The company allegedly marketed policies that included these service agreements without offering the option to purchase insurance without them, and without presenting their separate prices.

Shlomo Insurance had argued for the dismissal of the lawsuit, asserting compliance with all regulations. The company claimed it allows policyholders to purchase property insurance without service agreements, itemizes their costs, offers multiple providers for each service, and does not tie their purchase to discounts. They also presented data suggesting 44.85% of their clients buy policies without these agreements, indicating customer choice is respected.

However, the court, presided over by Judge Carmit Ben Eliezer, found sufficient evidence to proceed. The court ruled that insurance agents, acting on behalf of Shlomo Insurance, apparently failed to provide the required information about service agreements during the pre-contractual phase. The judge stated that the evidence suggests in numerous cases, laws and directives were violated by representatives of two different agencies selling Shlomo Insurance's comprehensive policies. In these instances, potential customers were offered policies including service agreements without being informed they could waive them, without seeing separate prices, and without being offered a choice of at least two providers.

The court held Shlomo Insurance responsible for the actions and omissions of its agents, rejecting the company's defense that responsibility lay solely with the agents. The insurance company was ordered to pay 30,000 shekels in legal costs and fees. The case will now proceed as a class action, with a final decision on its merits or a potential settlement to follow.