A Look Back for Capital Market Supervisor

Samet credited with car insurance reforms and shaking up pension funds.

The outgoing supervisor of the capital market, insurance and savings, said yesterday that her office has accomplished quite a bit during her more than four years in the position. "We have made remarkable progress in the past few years, but there are some things we have not managed to advance due to personnel shortages," Tsippi Samet told Ha'aretz.

A little more than a week before leaving the post, Samet can look back on some significant achievements in her four-and-a-quarter years of office, including a shake-up in compulsory vehicle insurance, the separation of "old" and "new" pension funds, removal of former investment restrictions on the insurance companies and a move toward more transparency in bringing more clarity for life insurance policy holders.

Despite her belonging to one of the unreformed positions of supervision that involves a hodgepodge of fields, it is difficult to find any one area in her purview that she has neglected. On the other hand, it is hard to pinpoint a dramatic reform that she has managed to complete. Samet believes the rapid turnover of finance ministers during her term affected the efficiency of her potential accomplishments. She has had to work with four ministers - Ya'akov Ne'eman, Meir Sheetrit, Avraham Shochat and the incumbent Silvan Shalom - "not including when Netanyahu filled the post for three months." As each new minister arrives, he devotes time to learn the ropes and understand budgetary issues. "Our issues are much more complex, and until the minister has settled into his position and weighed the matter, much time has passed," she said.

One major topic that has taken Samet's attention is the pension field with its heavy actuarial deficits, structural problems and conflicts of interest. In this case, Samet explained that the problem was not only due to the quick-change finance minister, but also the political difficulty in addressing the problems of pension funds tightly linked with the Histadrut labor federation. Samet and others, therefore, argue that the pensions supervision be independently freed from the treasury's responsibility, to stand alone like the Antitrust Authority.

Having come to the job from the banking supervision unit at the Bank of Israel, Samet adopted many practices from the central bank and turned them on the insurance field. However, Samet acknowledged that supervision on the insurance companies does not match that on the banks. This is partly due to staff size (70 compared to 180 for the banks) and the fact that her unit has no enforcement department. This forces her to turn to outside accounting firms, which may work with the very companies being investigated, thereby arousing questions of conflict of interest. "It is a problem," she admitted.

Compared to the collapse of two major insurance players in the 1990s and the exposure of a cartel in the industry, Samet's tenure has been noted for its stability in pensions and insurance and the payoffs from this for the insured and fund members.

Samet criticized the concentration in the insurance and banking markets. "We would have expected the insurance companies to develop the ability to compete in several banking activities, such as credit. But the firms profited so much in their fields that they don't feel like disturbing this by competing with the banks," she said. "Anyone competing against the banks could be in for a thrashing. Look what happened to Shlomo Piotrkowsky who set up Visa AlphaCard." [AlphaCard was a short-lived competitor to the Visa CAL credit card, and managed, in its time, to shake up the credit card market, by, inter alia, slashing commissions].

Maybe more than anything, Samet will be remembered for reforming the compulsory vehicle insurance field. Reforms, as always, stir up interested parties, and many complained of the changes that will result in the closure of the Avner insurance "pool," claiming it would lead to higher premiums. Samet responded by pointing to "22 percent lower premiums in the past few years."