From September 1: The state returns to insuring cargo against war and terror

The state is returning to serve as the insurer for Israeli foreign trade. The Ministry of Finance and the Tax Authority announced that the program for insuring cargo against war and terror risks will be reactivated starting September 1, 2026. The program, operated through the Tax Authority's compensation fund, is intended to allow importers and exporters to continue moving goods to and from Israel even when commercial insurance companies are struggling or unwilling to bear the security risk.

The program was previously operated until mid-June, and under it, cargo for dozens of importers and exporters was insured for a total volume of more than 1 billion dollars. According to the Ministry of Finance, the decision to renew it was made following requests from the business sector and importers' associations, against the backdrop of concerns that there would not be sufficient insurance supply in the private market in light of security risks and expected loads.

Cargo insurance is a significant component in the international trade chain. When cargo is on its way to Israel, on a ship, in a plane, at a port, or in land transit, it is exposed not only to ordinary damages like an accident, fire, or theft, but also to risks stemming from war and terror as Israel has experienced in recent years. Coverage for these risks is not always included in regular commercial policies, and some insurance companies even refuse to deal with it. Even if a company finds an insurance company, during periods of escalation such insurance can become very expensive or limited.

From the economy's perspective, the significance is not limited to protecting the value of the goods themselves. Without proper insurance, importers might avoid ordering cargo or demand a higher risk premium, shipping and aviation companies might reduce activity, and the cost might eventually roll over into product prices. At the same time, exporters might have difficulty obtaining coverage that would allow them to send goods to customers abroad. Therefore, the state seeks through the program to reduce the risk that the security situation will also become a financial barrier to trade activity. In fact, the compensation fund serves in this case as a kind of "insurer of last resort," when the state takes upon itself a risk that the private market struggles to absorb.

The Ministry of Finance emphasizes that the goal of the renewal is to ensure certainty and continuity in the supply chain, and to allow the flow of essential goods even during a period of security uncertainty. Accountant General Michal Abadi-Boiangiu defined the move as a "national layer of protection," while Tax Authority Director Shai Aharonovich noted that the program is intended to serve as an anchor when commercial insurance entities prefer to avoid exposure to risks.