International reinsurance big Swiss Re has determined to considerably cut back its actions in Israel. After doing this within the pension sector, the corporate reported in early December in a presentation to buyers that in 2025, it had taken actions that primarily concerned exiting its areas of exercise in medical health insurance and incapacity and work capability loss insurance coverage, a transfer that the corporate itself defines as a “run-off” – self-liquidation, wherein it doesn’t present reinsurance for brand spanking new and outdated insurance policies which are operating down.
A reinsurer is an insurance coverage firm that takes on a part of the chance of the native insurance coverage firm, in trade for a price. On this method, the native insurance coverage firm reduces its danger and might direct capital to further actions. If an excessive occasion happens, each corporations take up the harm.
Swiss Re suffers losses – the Capital Market, Insurance coverage and Financial savings Authority doesn’t need the general public in Israel to pay for it
From Swiss Re’s perspective, it’s experiencing regulatory uncertainty concerning the prices it must pay to insured purchasers within the well being sector, the place it’s compelled to soak up losses, with the emphasis on medicine outdoors the federal government funded drug basket, which have gotten dearer. These medicine lengthen life and have to be paid for over an extended time frame, and on the similar time, sufferers are extra simply authorised to obtain these costly medicine, which may value thousands and thousands of shekels.
Market sources say, “There isn’t any insurance coverage firm that has not raised the priority in regards to the reinsurer leaving Israel with the regulator, the Capital Market, Insurance coverage and Financial savings Authority, within the final two years. The regulator is just not responding and Swiss Re merely threw up its arms and stated that it’s not keen to tackle the chance.”
Nonetheless, the query is extra advanced. The dilemma going through the Capital Market Commissioner Amit Gal, is whether or not to permit Swiss Re to extend costs by vital percentages. In accordance with market sources, this implies a price that would attain billions of shekels a 12 months that can fall on the patron – that’s, it can improve the premium for the general public – or that the reinsurer will cut back its exercise in Israel. Plainly the Capital Market, Insurance coverage and Financial savings Authority was not satisfied that maintaining the big reinsurer justifies the rise in costs for the general public. On the similar time, it must be remembered that at the very least for now, native insurance coverage corporations aren’t shedding cash within the well being sector, to allow them to “handle” even with out the reinsurer.
Nonetheless, Israeli insurance coverage corporations have been involved and have been warning for a while that what occurred within the discipline of nursing care insurance coverage, the exit of Israeli insurance coverage corporations from the sphere, may be repeated in drug insurance coverage, if the Capital Market Insurance coverage and Financial savings Authority doesn’t enable premiums to be raised.
There are these out there who’re making an attempt to downplay the state of affairs and stressing that that is neither a brand new drawback nor a dramatic growth. In accordance with a senior trade official, “It is a pattern that has existed for a few years. Reinsurers have exited many areas in Israel that contain dangers, resembling obligatory automotive insurance coverage, however this has not meant that there isn’t a obligatory insurance coverage in Israel.” The supply provides, “Swiss Re has not been energetic within the well being sector for a very long time, however primarily helps previous insurance policies. They don’t seem to be exiting fully however are decreasing their exercise.”
How dramatic an occasion is that this?
One truth is indeniable. Swiss Re is the biggest reinsurer working in Israel, and by a big margin from different corporations. “They’re the primary reinsurer within the well being sector in Israel, the market depends on them. Their exit is dangerous information and I do not know if anybody else will step into their sneakers,” a market official emphasizes.
The massive insurance coverage corporations say that this could not have an effect on them, at the very least not at first. “The insurance policies we market immediately don’t have anything to do with Swiss Re. They’re in our outdated insurance policies and they aren’t popping out of there,” says a supply at one of many massive corporations. A supply at one other massive firm claims that “to our understanding, there isn’t a dramatic affect.”
However, the market supply explains that at the very least within the first stage, the transfer is anticipated to have an effect on primarily the smaller corporations energetic within the trade, resembling Direct Insurance coverage, Ayalon, and AIG. However this may occasionally additionally translate into larger premiums that the complete Israeli public can pay.
In accordance with the supply, insurance coverage corporations will now should tie up extra capital, and tackle extra dangers, and won’t be able to launch it for different actions, which may result in larger costs for insurance policies for the general public. Nonetheless, this is not going to occur within the quick time period, for the reason that value improve would require approval from the Capital Market, Insurance coverage and Financial savings Authority.
The supply describes one other concern. In accordance with him, there’s a danger of hurt to competitors, as “The power of small corporations, which must tie up their capital, to compete and enter such areas tends to zero. Small corporations may have a really nice issue in opposition to the big corporations.” It must be famous that Israel is just not the one nation wherein Swiss Re has determined to cut back exercise. Additionally it is doing so in Australia within the discipline of disabilities, and in South Korea within the discipline of well being, however plainly the exit from Israel is probably the most vital motion taken by the reinsurer this 12 months.
Printed by Globes, Israel enterprise information – en.globes.co.il – on December 31, 2025.
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