Ayalon Is Sole Bidder for Clalit Health Fund’s Massive Long-Term Care Insurance Tender
Out of six eligible insurance companies invited to bid for Clalit Health Fund’s long-term care insurance tender, only Ayalon Insurance submitted a proposal, according to reports from Calcalist. The tender, which closed recently with official results expected by August 11, covers a group policy insuring approximately 2.7 million people, making it the largest group long-term care insurance policy worldwide.
The tender was limited to insurers with prior experience managing long-term care portfolios, narrowing the field to Harel, Menora, Clal, Migdal, Phoenix, and Ayalon. All but Ayalon declined to participate. This outcome is surprising given the expectation that multiple companies would compete. Since 1998, Harel managed Clalit’s policy, directly and through its subsidiary Dekel, but chose not to re-enter despite the policy becoming less risky for insurers after regulatory changes and a strengthened claims fund.
The reluctance of major players like Harel and Menora is attributed to ongoing regulatory uncertainties, reputational risks from claim denials, and stringent contractual demands imposed by Clalit, including penalties related to policy management. Menora, which manages the other three health funds’ long-term care policies, also opted out despite potential revenue gains.
Ayalon, a smaller player with limited experience in health fund long-term care insurance, primarily offering private policies that were discontinued in 2019, now faces a significant challenge managing this vast and complex portfolio. The policy’s management will be led by Ayalon’s senior health division executives with prior sector experience. The contract includes optional extensions potentially lasting up to eight years, pending regulatory approval.
The tender’s results highlight the sector’s instability, which has been sustained only through premium hikes, reduced benefits, stricter eligibility criteria, and diminished insurer liability. With Israel’s aging population and rising claims, the current model may prove unsustainable. The Finance Ministry prefers maintaining the existing framework with reforms focused on public coverage via National Insurance, which faces financial risks. Meanwhile, the Capital Market Authority and Health Ministry advocate alternative solutions, including removing insurance management from health funds. Clalit stated the tender process is ongoing and declined further comment.
