Ayalon Insurance to Compensate Homeowners for Unauthorized Premium Increases in Class Action Settlement
Ayalon Insurance has agreed to compensate homeowners whose insurance premiums were raised without their explicit consent during policy renewals, according to a settlement submitted for approval at the Central District Court. The class action lawsuit, filed in 2022, alleged that Ayalon unlawfully canceled previous discounts and benefits, resulting in higher premiums. The court recently ruled there was no reason to dismiss the parties' request to approve the settlement and ordered the process to move forward with public notification.
The compensation mechanism outlined in the settlement is based on two retroactive fixed rates calculated according to the type of excess charges imposed by Ayalon. It applies to customers whose home insurance policies were extended or charged without consent from January 1, 2015, until the settlement approval becomes final. Policyholders who faced premium increases due to canceled discounts will receive compensation equal to 55% of the excess premiums charged. Those whose premiums rose because of the "plumber's circular" regulatory change, which altered water damage claim handling, will be compensated at 35% of the excess premiums.
Beyond financial compensation, the agreement mandates Ayalon to improve its consumer practices to prevent recurrence. The insurer committed to updating guidelines for insurance agents to clearly disclose discounts and premium changes before contract renewal. Additionally, new policies will include clarifications, and customers will receive notifications when discounts expire during the policy term.
Following the court's decision, the parties must publish the settlement notice publicly and send copies to the Legal Advisor to the Government and the Court Administration. A 45-day window will then open for objections or requests to opt out of the class. Ayalon emphasized that final court approval is still pending and that the settlement is not expected to materially affect its financial status.
The original estimated group damage exceeded 3 million shekels, involving both Ayalon and Phoenix Insurance. Phoenix's settlement was previously approved, prompting separate mediation with Ayalon to finalize this compensation framework.
