Nine years have passed since a million Israelis took to the streets to protest the cost of living. Given the bill that MK Miki Zohar of Likud has been promoting aggressively – which puts the interests of the strong and well-connected over those of the general public – it seems as if the influence of those protests has totally dissipated.
The private member’s bill being advanced by Zohar would block the MAX credit card company (formerly LeumiCard) from being able to sell insurance. If the bill is passed, it will maintain the insurance market as a closed club for insurance agents only and block efforts to compete with them.
The agents came to Zohar after they failed on other fronts. Their efforts to block competition by objecting to giving an insurance agency license to MAX were rebuffed by the Capital Markets, Insurance, and Savings Authority, the Treasury’s budget division, the Competition Authority and the Justice Ministry – so they decided to try the private legislation route. There, rather than conduct a professional discussion, one can get to MKs and persuade them through lobbyists or by exerting pressure through the parties’ central committees.
Enter Zohar. He prefers the interests of the thousands of insurance agents who have joined Likud in recent years, over the clear interest of the public to increase competition in the insurance field.
Insurance agents get a commission that averages 12 percent of the cost of general insurance policies, like car or home insurance. These commissions come to a total of 2.7 billion shekels ($770 million), all of which comes from the pockets of those insured. MAX committed to reducing the commissions on insurance by around 50 percent. Its entrance into the field, therefore, could be expected to save the public at least a billion shekels a year.
Insurance agents warn that a large company like MAX will use its power to undercut the agents, seize control of the market and then raise prices. But the head of the Capital Markets, Insurance, and Savings Authority, Moshe Barkat, has imposed numerous restrictions on MAX to prevent this, making the scenario of MAX cornering the market far-fetched. Meanwhile, the agents are blocking its entrance into the market and are continuing to earn inflated commissions.
Zohar has completely enlisted himself in this mission and has even conditioned his support for the coronavirus grant bill on his bill passing. Prime Minister Benjamin Netanyahu hastened to capitulate, and now he is pushing Finance Minister Yisrael Katz to come to a “compromise” with Zohar. But any such compromise will block competition, preserve the exaggerated power of insurance agents and undermine the public’s welfare. This bill must not be allowed to pass.
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The above article is Haaretz’s lead editorial, as published in the Hebrew and English newspapers in Israel.