Arab drivers buy insurance primarily from two of the country’s insurance companies, while the other companies sell them insurance selectively, if at all. As a result, Arab customers wind up paying more, according to the head of a leading Arab economic group in Israel.
Accountant Ziyad Abou Habla, head of the Economic Council for Arab Sector Development and a candidate for Bank Leumi’s board, found that Arab citizens buy their mandatory car insurance primarily from Menora and Harel. Migdal, Ayalon and Shirbit also sell insurance to the sector, albeit to a limited extent, while the other companies sell them insurance selectively or not at all.
“The Arab customer does not have a range of insurance plans that insurance agents can offer,” said Abou Habla. While insurance rates differ by up to 23% for customers at large, Arabs cannot take advantage of the competition and wind up paying 10% more than the average Jewish customer, he said.
This is one of the reasons that 70% of uninsured vehicles belong to Arabs, he added.
Furthermore, “an Arab customer who submits two claims in the course of three years is tossed into the pool” – those customers insured jointly by all insurance companies, such as motorcyclists, because no insurance company wants them. As a result, they then wind up paying more.
Abou Habla’s research found that 94% of customers in the pool are motorcyclists, while the remaining 6% are Arabs.
“Insurance companies don’t outwardly say what the problem is,” said Abou Habla. His research found that insurance companies have several reasons for refusing to insure Arab customers: They tend to have a large number of children, which means every accident is likely to have more casualties; they tend to live in areas with poor road infrastructure; and they tend to have older cars.
“Some 53% of the sector is under the poverty line; that’s no reason to discriminate against them,” he added.
There are 400,000 vehicles in the Arab sector, which means the sector’s vehicle insurance is a NIS 2 billion industry. This includes NIS 800 million for mandatory insurance (some 20% of Israel’s total).
“This is a market that isn’t being exploited by the insurance companies,” he said.
Based on his findings, Abou Habla asked MK Zahava Gal-On (Meretz) to call an urgent meeting on the matter in the Knesset Finance Committee.
The Insurance Agents Bureau said it was aware of the problem and that it was working to advance Arab-sector insurance agents.
Phoenix and Menora stated in response that they did not discriminate based on race. Migdal declined to respond.
The Finance Ministry’s insurance commissioner said it was illegal to discriminate based on race, but that it was not aware of the statistics compiled by Abou Habla.
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