Five Insurance Firms to Pay 310.7 Million NIS in Delayed Payout Class Action
Five insurance companies in Israel will pay 310.7 million NIS to settle a 13-year class-action lawsuit over interest calculations on delayed policy payouts.
More than 13 years after legal proceedings began, five major insurance companies are set to pay a combined total of approximately 310.7 million NIS under settlement agreements submitted to the Tel Aviv District Court for approval. The settlements resolve class-action lawsuits regarding how interest was calculated on insurance payouts delayed to policyholders.
The companies involved are Harel Insurance, Phoenix, Clal Insurance, Migdal, and Ayalon. Harel is expected to pay 78.324 million NIS, Phoenix and Clal 74.05 million NIS each, Migdal 56.953 million NIS, and Ayalon 27.338 million NIS. The payments remain conditional upon court approval.
The Core Dispute and Long Legal Battle
The root of the dispute centered on when interest should begin accumulating if an insurance company fails to pay benefits within 30 days. Insurers argued the calculation should only start after all essential documents required to clarify the claim were received. Conversely, plaintiffs maintained the date should be set earlier—as soon as an initial inquiry indicating a demand for insurance benefits was made.
The legal marathon included certifying the claims as class actions, hearings in the Supreme Court, a partial judgment, and the appointment of an expert to assess the scale of damages. Following three mediation proceedings, the parties reached an agreement.
Distribution Mechanism and Future Rules
Due to the massive volume of claims and the extensive time period covered, a separate and complete individual calculation for each policyholder will not be conducted. Instead, a distribution mechanism has been established that primarily factors in the insurance payout amount and the elapsed time until funds were disbursed.
The settlements also mandate a future policy shift regarding interest handling, obligating companies to establish clearer rules for when interest begins accruing based on insurance types and required documentation.
These updated guidelines will apply across car, property, life, disability, long-term care, loss of working capacity, medical expenses, and critical illness policies. The settlements currently await judicial approval, after which a 45-day window will open for public objections or requests to opt out.
