AIG Israel Sees Insurance Profits Return and Begins Lowering Prices Amid Market Recovery
AIG Israel CEO Yifat Reiter announced at the Calcalist and Mizrahi Tefahot Growth Conference that the insurance market has returned to profitability following the disruptions caused by the COVID-19 pandemic and the events of October 7. These events had previously driven up spare parts costs, increased car thefts, and led to significant losses in the sector. Reiter explained that the market correction now allows companies to reduce prices while maintaining profitability.
Reiter highlighted AIG’s competitive strategy in the highly price-sensitive car insurance market, emphasizing three pillars: price, trust, and service. She noted that AIG’s smaller size enables greater agility and responsiveness, resulting in a renewal rate of 80-90% for their policies and a 50% increase in revenues. Despite intense competition, with 16-17 companies vying in the car insurance sector, Reiter stressed that customers value reliable service over minor price differences.
Regarding market volatility, Reiter said the industry has experienced two major shocks recently, creating significant uncertainty. She expects insurance cycles to shorten due to ongoing crises and competition. While some companies rush to cut prices, others remain stagnant, but AIG continues to adapt proactively. She also noted that although switching insurers mid-policy is easier today, most customers still prefer to wait until renewal.
AIG operates without insurance agents, unlike many competitors, allowing direct customer relationships that build trust and improve data quality. This direct model supports better service delivery, especially with AI-driven insights. As the only international insurer operating in Israel, AIG faces challenges explaining local realities to its parent company but benefits from strong corporate support due to Israel’s economic resilience.
Finally, Reiter addressed AIG’s limited exposure to the volatile capital markets, stating the company prioritizes long-term stability and core insurance business focus over short-term market gains, contrasting with other insurers that profited from market rises.
