Israeli Insurance CEOs Clash Over Agent Compensation and Policy Churning
CEOs of Israel's top insurance firms clashed at an Eilat conference over agent compensation models that critics say drive excessive policy churning, sparking fierce debate among hundreds of attending agents.
A tense confrontation erupted on Monday at the annual insurance conference of the Insurance Agents Chamber in Eilat, where chief executives of Israel's four major insurance companies clashed over agent compensation models and excessive policy transfers, known as "twisting."
During the panel discussion before an audience of 600 insurance agents, Migdal Insurance CEO Ronen Agassi and Clal Insurance CEO Yoram Naveh launched a direct critique of the current market structure. They argued that upfront commission models encourage agents to frequently move clients between financial institutions, harming savers and distorting long-term investments.
"The industry, for various reasons, is encouraging excessive churning in pension and savings products," Naveh stated. He warned that this trend forces investment managers to prioritize liquid assets over long-term infrastructure and alternative investments, ultimately destabilizing the market.
Agassi echoed these concerns, asserting that paying agents entirely at the point of sale rather than spreading compensation over ongoing service delivery creates a distorted market. "It is bad for the client, bad for the manufacturer, and ultimately bad for the agent," Agassi noted, adding that frequent transfers often move clients from one losing portfolio to another.
Defending Agents and Market Freedom
In contrast, Harel Insurance & Finance CEO Nir Cohen defended the independent agents and criticized the public debate over compensation. "Discussing compensation in such a forum is very unhealthy. There are no regulations dictating how we compensate; this is a completely private market," Cohen said, adding that independent agents take on substantial entrepreneurial risks compared to salaried corporate sales personnel.
Menora Mivtachim CEO Michael Kalman adopted a conciliatory tone toward the agents, dismissing the focus on compensation structures as a simplistic view. Kalman emphasized that long-term professional decision-making regarding pension products carries far more weight than minor management fee variations.
Chamber President Responds
Insurance Agents Chamber President Moshik Ben Porat defended the agents, stating they provide objective advice tailored to clients' best interests. He suggested that insurers could curb excessive transfers by creating retention-based reward metrics rather than blaming agents for system-wide flaws.
