Israeli Insurers Begin Returning Nearly One Billion Shekels to Policyholders After Decade-Long Legal Battle
Seven major Israeli insurance companies have started reimbursing close to one billion shekels to policyholders following one of the largest class-action settlements in the country. The companies involved include Hachshara, Migdal, Harel, Menora, Clal, Phoenix, and Ayalon. Hachshara has already made payments, while Migdal, Harel, and Menora have begun the refund process. Clal, Phoenix, and Ayalon are preparing to pay by the court-mandated deadline of August 9, 2024. Hundreds of thousands of policyholders will receive automatic refunds without needing to apply, with payments credited directly to their insurance policies or bank accounts if the policy was already cashed out.
The ruling was issued in May 2024 by Judge Michael Tamir, who ordered the payments within 75 days, after a delay from the original payment deadline the previous year. The settlement, approved earlier in 2024, followed a 14-year legal saga involving claims that the insurers unlawfully charged an additional "policy factor" fee on certain managerial life insurance policies sold between 1982 and 2003. This fee was intended to cover administrative costs unrelated to policy size. The affected policies include Clal's "Profile" and "Mitav," Harel's "Adi" and "Meule," Migdal's "Yoter," Menora's "Merav," Ayalon's "Adif," Phoenix's "Meniv," and Hachshara's "Adif."
The compensation formula awards 42% of the collected fee plus 90% of lost interest, resulting in refunds ranging from several hundred to a few thousand shekels, with rare cases reaching tens of thousands. Heirs of deceased policyholders are also entitled to compensation, with insurers responsible for locating them and distributing funds. The court appointed pension consultant Avi Eichler to oversee the implementation of the settlement, ensuring proper calculation, identification of eligible policyholders, and fund transfers.
The settlement was mediated by retired Supreme Court Justice Yoram Danziger, who highlighted its unprecedented scale in Israeli class-action history. Despite ongoing disputes over interpreting complex agreement terms, the court emphasized that payment should not be delayed, even if appeals are filed. The insurers, represented by experienced legal and economic advisors, had previously requested clarifications on payment calculations, but the court rejected claims lacking basis in the settlement text. This resolution brings closure to a legal process spanning over a decade, providing financial redress to a large group of Israeli insurance customers.
