Israeli Insurance Agency Fined 10.5 Million Shekels for Illegally Encouraging Early Pension Withdrawals

The Israeli Capital Market Authority imposed a financial penalty and civil fine totaling approximately 10.5 million shekels on Naaman Insurance Agency, managed by Naor Naaman, following multiple violations of pension regulation and advisory laws that harmed pension savers. The sanctions followed an extensive investigation triggered by complaints from various sources. The Authority's intelligence and enforcement department uncovered a pattern of encouraging clients to unlawfully withdraw pension funds early, which compromised their insurance coverage and exposed them to tax liabilities and high advisory fees.

The agency's representatives provided pension withdrawal advice without holding the required pension advisory license. In some cases, clients were misled into believing they were communicating with representatives of the institutional bodies managing their pension savings. Additionally, agency staff accessed clients' personal accounts on institutional websites without their knowledge. Post-advisory justification documents sent to clients contained numerous deficiencies, including signatures from licensed advisors who did not actually provide the advice.

The Authority rejected all the agency's defenses during the required hearing and finalized the fine. The total penalty includes fines for 27 violations of unlicensed pension marketing (7.3 million shekels), two violations related to improper use of information from the clearinghouse (542,400 shekels), nine violations for failing to provide written justification documents (675,000 shekels), 33 violations regarding the presentation of information in justification documents (2.475 million shekels), and 37 violations of service regulations including improper fee disclosures and unauthorized advertising (2.775 million shekels). Another 2.775 million shekels fine was imposed for 37 violations related to power of attorney procedures.

Alongside the pension-related investigation, the Authority is conducting a separate review of the agency's insurance operations. The findings highlight serious regulatory breaches that jeopardized consumer protections in the pension and insurance sectors.