Opportunities in Israeli Non-life Insurance Industry : Ken Research


Gradually the macroeconomic environment has significantly improved all over the world with rising GDP in most of the countries and increasing middle class and high net worth population with more and more financial resources. These factors have led to the growth of life and non-life insurance companies with more number of companies entering the insurance sector and the existing companies expanding their business and earning more profits. In Israel, the non-life insurance segment has followed a non-declining growth trend, capturing a significant share of the insurance industry, which is reported to be 32.6% of its insurance industry’s gross written premium in 2014. While the penetration and density ratio are higher in Israel than in about one third of OECD countries, the penetration ratio has followed a downward trend since 1998, both in life and non-life insurance with the penetration ratio of non-life segment always above the life insurance segment of the industry.

Mapping the Non-life Insurance Industry of Israel

The key categories under the non-life insurance industry includes: motor, property, liability, marine, aviation and transit insurance, where property and motor insurance dominates the non-life insurance industry the property insurance category’s gross written premium posted a review-period CAGR of 3.6%, and accounted for 25.8% of the segment’s gross written premium in 2014, and motor insurance was the largest category in the non-life segment, accounting for 59.2% of its gross written premium in 2014.

The unique feature of Israeli non-life insurance industry is its low level of competition due to concentrated market structure as against the rising competition trend all over the world.The Israeli non-life segment is highly concentrated, with the 10 leading companies accounting for 90.2% of the segment’s gross written premium in 2014.This has emerged as one of the major challenge to the insurance industry. The Return on Equities has declined on account of financial crisis and several internal factors like introduction of more stringent capital requirements. However several opportunities do exist as far as the macroeconomic trend and industry friendly, impact of natural calamities and expansionary reform are considered.

In the next five years, the Israel non-life insurance industry is expected to show positive growth with the motor insurance and property insurance dominating the industry as always. But with a different trend of property insurance category capturing more share of the non-life insurance industry’s GWP in coming years. Motor insurance category and property insurance category is expected to grow with avalue of 1.74 billion U.S dollars and 3.77 billion U.S dollars in 2019.Domination by the motor insurance category is obvious on account of the compulsory sub category motor third-party liability insurance. Within the motor insurance category, the motor hull sub category accounts for 58% and motor third-party liability insurance accounts for 42%.Also, considering the recent reform taken up by the govt. in the insurance industry, higher level of competition in the market with the entrance of more no. of companies in the industry, is expected. Also, due to increased capital and with the wave of adoption of advance technology all over the world, more efficient market conditions are anticipated.

Key Macroeconomic Trends Driving Growth in Israeli Non-life Insurance Industry

The financial crisis of 2007-08 had adversely affected the non-life insurance industry of Israel. However, with the improvement in GDP and other macroeconomic variables, the growth in the insurance industry gained momentum and showed stable and steady non-declining growth rates from 2009 through to 2014 as shown by key performance indicators such as written premium, incurred loss, loss ratio, commissions and expenses, combined ratio, total assets, total investment income and retentions during the review period (2010-2014). The trend is expected to be continuing in the coming years as well.

Some macroeconomic factors driving growth in Israeli non-life insurance industry include:

  • The population of Israel has been increasing which has led to increasing demands for all categories of insurance products, with non-life insurance products in particular.
  • With increasing GDP and GDP per capita, people have increased financial resources and property.
  • Israeli insurance industry has undergone a no. of reforms since 2000, which aims at:
  • Developing the regulatory regime into favorable one, open to both Israeli and foreign owned insurers in order to increase competition and market efficiency.
  • Significant increase in the scope of insurance companies’ activities.
  • The deepening of the Israel capital markets, their integration into global capital market and a liberalisation of investment regulations
  • Reduction of government involvement in the sector.
  • Israeli population being prone to natural calamities, prefer insurance of life and properties.

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Ankur Gupta, Head Marketing & Communications




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