Capital Market Authority Prohibits Regional Car Insurance Discrimination
Israel's Capital Market Authority finalized guidelines prohibiting insurers from discriminating against drivers based on address, targeting practices in Arab and peripheral towns.
Israel's Capital Market, Insurance and Savings Authority has issued a final regulatory position prohibiting insurance companies from discriminating against drivers based on their place of residence when purchasing car insurance.
The directive clarifies existing legal prohibitions rather than introducing new ones. It follows numerous complaints from drivers in Arab localities and peripheral regions who faced difficulties purchasing policies. Industry agents previously revealed that certain insurers blocked online transactions or imposed stringent underwriting demands based solely on address changes.
Restrictions on Underwriting Practices
The regulatory stance explicitly forbids insurers from demanding clean driving records exceeding three years, addressing a practice where companies required five years of history despite government databases only maintaining three years of records. Furthermore, companies cannot use geographical areas as underwriting or pricing variables unless justified by rigorous statistical research demonstrating a direct correlation to insurance risk.
While the authority leaves theoretical room for risk-based pricing should robust statistical data emerge regarding vehicle thefts or regional hazards, no insurer has yet provided sufficient empirical proof. The ruling applies universally to compulsory, comprehensive, and third-party liability vehicle policies purchased directly or through agents.
