Insurance company to pay 1.8 million shekels to policyholders over illegal fees

The Tel Aviv District Court has approved a settlement agreement in a class action lawsuit against the insurance company Hachshara, under which the firm will return approximately 1.8 million shekels to its customers. Judge Idit Berkowitz noted that the proceedings address an issue of significant public importance, affecting the majority of the population that insures their vehicles in Israel.

The lawsuit was filed by a policyholder, represented by attorneys Yitzhak Aharonov and Shlomi Hass, after he was charged a 20-shekel "supplementary fee" in 2021 for expanding insurance coverage for additional drivers, according to a report in Calcalist. The claim alleged that this fee was collected without legal basis, was not anchored in the policy, and violated the instructions of the Commissioner of Insurance. Hachshara stated that it had ceased collecting this payment as early as July 2022.

The settlement, reached through a mediation process with retired judge Rahamim Cohen, stipulates that the company will return 85% of the collected amounts. Refunds will be processed through direct credit to the policies of active customers or via bank transfer to former clients. Funds belonging to policyholders who cannot be located will be transferred to a public fund supporting reservists and their families.

The court praised the high restitution rate. Plaintiff's counsel, Adv. Yitzhak Aharonov, emphasized the significance of the ruling:

"The importance of this ruling lies in the clarification that insurance companies are not permitted to collect various fees and surcharges—regardless of their name—unless they were explicitly defined in the proposal, approved by the regulator, and agreed upon by the policyholder."