Clalit Health Fund Secures Eight-Year Long-Term Care Insurance Deal with Ayalon

Clalit Health Fund announced it has signed an eight-year agreement with Ayalon Insurance to provide long-term care insurance services to its members starting January 2027. This deal replaces Harel Insurance, which ceased offering these services in 2024 but extended coverage until the end of 2026 due to the absence of a successor. The agreement resolves uncertainty about the future of Clalit’s long-term care insurance, which faced a crisis after Harel’s withdrawal and no immediate bidders emerged in the subsequent tender.

The crisis stemmed from a 150% increase in long-term care insurance claimants between 2012 and 2024, driven by an aging population living longer but not necessarily healthier lives. This global challenge has made insurers wary of the long-term financial risks involved. To encourage insurer participation, regulatory changes were made so insurers only provide service without bearing the insurance risk, which remains with the health funds. Despite this, insurers are cautious about reputational risks linked to rising premiums and service quality.

Clalit’s situation was particularly acute due to its older and larger insured population, leading to concerns about fund depletion. Regulatory reforms by the Capital Market Authority in 2023 raised eligibility thresholds for claims and ended policy continuity obligations, meaning new policyholders transfer to the new insurer after contract expiration. These changes helped stabilize Clalit’s insurance fund, which has since quintupled in size.

Ayalon was the sole finalist in the recent tender, with other major insurers like Menora and Migdal withdrawing before the final decision. Clalit’s insurance head, Margarita Baruch-Serur, emphasized that Ayalon views this as a strategic opportunity to expand its customer base, which includes 2.7 million Clalit members. The fund now expects stability for the next eight years, though contract exit clauses remain.

Baruch-Serur also noted that while claim requirements have tightened, insured members still receive entitled benefits, with the fund actively managing complex claims to ensure fairness. The agreement marks a significant step in resolving the long-term care insurance challenges faced by Clalit and potentially sets a precedent for other health funds in Israel.