Opportunities in Israeli Non-life Insurance Industry : Ken Research

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Opportunities in Israeli Non-life
Insurance Industry Ken Research
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Gradually the macroeconomic environment has
significantly improved all over the world with
rising GDP in most of the countries and
increasing middle class and high net worth
population with more and more financial
resources. These factors have led to the growth
of life and non-life insurance companies with
more number of companies entering the insurance
sector and the existing companies expanding their
business and earning more profits. In Israel, the
non-life insurance segment has followed a
non-declining growth trend, capturing a
significant share of the insurance industry,
which is reported to be 32.6 of its insurance
industry's gross written premium in 2014. While
the penetration and density ratio are higher in
Israel than in about one third of OECD countries,
the penetration ratio has followed a downward
trend since 1998, both in life and non-life
insurance with the penetration ratio of non-life
segment always above the life insurance segment
of the industry.
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Mapping the Non-life Insurance Industry of
Israel The key categories under the non-life
insurance industry includes motor, property,
liability, marine, aviation and transit
insurance, where property and motor insurance
dominates the non-life insurance industry the
property insurance category's gross written
premium posted a review-period CAGR of 3.6, and
accounted for 25.8 of the segment's gross
written premium in 2014, and motor insurance was
the largest category in the non-life segment,
accounting for 59.2 of its gross written premium
in 2014. The unique feature of Israeli non-life
insurance industry is its low level of
competition due to concentrated market structure
as against the rising competition trend all over
the world.The Israeli non-life segment is highly
concentrated, with the 10 leading companies
accounting for 90.2 of the segment's gross
written premium in 2014.This has emerged as one
of the major challenge to the insurance industry.
The Return on Equities has declined on account of
financial crisis and several internal factors
like introduction of more stringent capital
requirements. However several opportunities do
exist as far as the macroeconomic trend and
industry friendly, impact of natural calamities
and expansionary reform are considered.
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In the next five years, the Israel non-life
insurance industry is expected to show positive
growth with the motor insurance and property
insurance dominating the industry as always. But
with a different trend of property insurance
category capturing more share of the non-life
insurance industrys GWP in coming years. Motor
insurance category and property insurance
category is expected to grow with avalue of 1.74
billion U.S dollars and 3.77 billion U.S dollars
in 2019.Domination by the motor insurance
category is obvious on account of the compulsory
sub category motor third-party liability
insurance. Within the motor insurance category,
the motor hull sub category accounts for 58 and
motor third-party liability insurance accounts
for 42.Also, considering the recent reform taken
up by the govt. in the insurance industry, higher
level of competition in the market with the
entrance of more no. of companies in the
industry, is expected. Also, due to increased
capital and with the wave of adoption of advance
technology all over the world, more efficient
market conditions are anticipated.
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• Key Macroeconomic Trends Driving Growth in
  Israeli Non-life Insurance Industry
• The financial crisis of 2007-08 had adversely
  affected the non-life insurance industry of
  Israel. However, with the improvement in GDP and
  other macroeconomic variables, the growth in the
  insurance industry gained momentum and showed
  stable and steady non-declining growth rates from
  2009 through to 2014 as shown by key performance
  indicators such as written premium, incurred
  loss, loss ratio, commissions and expenses,
  combined ratio, total assets, total investment
  income and retentions during the review period
  (2010-2014). The trend is expected to be
  continuing in the coming years as well.
• Some macroeconomic factors driving growth in
  Israeli non-life insurance industry include
• The population of Israel has been increasing
  which has led to increasing demands for all
  categories of insurance products, with non-life
  insurance products in particular.

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• With increasing GDP and GDP per capita, people
  have increased financial resources and property.
• Israeli insurance industry has undergone a no. of
  reforms since 2000, which aims at
• Developing the regulatory regime into favorable
  one, open to both Israeli and foreign owned
  insurers in order to increase competition and
  market efficiency.
• Significant increase in the scope of insurance
  companies activities.
• The deepening of the Israel capital markets,
  their integration into global capital market and
  a liberalisation of investment regulations
• Reduction of government involvement in the
  sector.
• Israeli population being prone to natural
  calamities, prefer insurance of life and
  properties.

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91-124-4230204
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