Israeli Car Insurance Firms Face Regulatory Pressure Amid Price Drops and Market Shifts
Over the past year, Israel's car insurance market has been under intense scrutiny as the Capital Market, Insurance and Savings Authority shifted from issuing warnings to enforcing price reductions. Comprehensive car insurance premiums have fallen by over 15%, following a sharp rise of approximately 70% in recent years. This surge had raised concerns that insurers were inflating prices despite competition among 16 companies, with six dominating two-thirds of the market.
Insurers attributed the previous price hikes to rising costs of spare parts, vehicle thefts, and car prices. While these factors partly justified the increases, the regulator concluded that the hikes were excessive. In 2022, the sector suffered a combined loss of 1.55 billion shekels in car insurance, but by 2024-2025, profits soared to nearly 4 billion shekels over two years, far exceeding the historical annual profit average of about 260 million shekels.
Consumer brand rankings revealed a decline for leading insurance companies such as AIG and Direct Insurance, which dropped about 30 places compared to last year. Despite this, car insurance remains a stable revenue source, with 3.7 million private vehicles on Israeli roads and two-thirds of Israelis holding comprehensive coverage, rising to 86% when including third-party insurance.
Beyond car insurance, Israeli consumers have increasingly turned to home contents insurance provided by the Tax Authority, especially amid ongoing conflicts with Iran. This basic state-backed coverage compensates for war-related damages up to tens of thousands of shekels, with an option to extend coverage to over one million shekels at a low premium. In 2023, 77,000 people purchased this extended insurance, with over 8,000 new sign-ups by February 2024.
Meanwhile, insurance companies have expanded offerings in other areas: Ayalon introduced health insurance allowing choice of surgeon outside approved networks; Shlomo offers life, mortgage, and electric vehicle insurance; and AIG emphasizes rapid claims payments. AIG remains the top-ranked insurer, followed by Direct Insurance and Libera. Proxibit has also expanded operations after obtaining a permanent license.
