The Policy Studies also presented recommendations for change in an attempt to eliminate these distortions. Since the publication of this research in October 1997, significant steps have been taken by the Knesset, the state commissioner of insurance, the Israel Consumer Council and others to deal with the situation. Information for this article, which will present a brief review of the problem and an update of recent events, has been supplied by a representative of the insurance commissioner. 1 Other data were gathered at Knesset committee meetings attended by a representative of the Institute for Advanced Strategic and Political Studies. Review Auto insurance in Israel is composed of property insurance and compulsory insurance.
Property insurance is voluntary and only covers damage to the vehicle itself.
Compulsory insurance is intended to cover bodily harm resulting from an accident and is mandatory for all vehicle owners. In Israel today there are some 1.55 million vehicles. The Compensation Law of 1975 states that premium rates will be set by the minister of finance with the approval of the Knesset Finance Committee. Added to the premium are charges of 6.94 percent which the insurance companies receive for the issuance of the policy, 1.6 percent to cover a state stamp tax, and 4.57 percent which goes to a Transportation Fund set up by the Ministry of Transportation. The rates for compulsory insurance are the same for all drivers and are determined solely by the size of the motor.