Car Insurance Costs Get A Price Cut

Kahlon Driving Down Car Insurance Rates, Putting Incentives into High Gearferrari-09.jpg

Recent reform measures taken by Finance Minister Moshe Kahlon and Capital Markets: Insurance and Savings Dorit Salinger will cut compulsory car insurance rates in the near future. The main change will be the government-induced reduction of rates in the pool of insurers of up to 16%, but this will be supplemented by a discount to safe drivers and those with cars featuring safety measures.

The motivation for this and other financial reforms (such as the telecom industry shakeup that created Golan Telecom) comes from the populist ideology of Kahlon. Kahlon was quoted as saying, “Israel obligates people to buy compulsory auto insurance, and we must therefore make sure that the public receives a fair price and good service. The insurance market annual turnover is NIS 5 billion, while the companies’ profit is 20%. We have said yes to a reasonable profit, but no to greed.”

These price cuts are on top of prior actions by Kahlon resulting in a net drop of 35% in compulsory car insurance rates since 2003. According to the plan, the cut in premiums for the coming year will be 250 NIS, followed by an average of 200 NIS in 2017, and an average of 50 NIS in 2018.