Motorcycle Insurance Bill Jumps Over First Hurdle

But now the law will wait while c'tee headed by justice minister seeks a compromise on rates

The Knesset yesterday passed the preliminary reading of a bill intended to lower insurance rates for motorcyclists.

Bikers shelter from the noonday sun during a protest against insurance rates.
Moti Kimche

In a compromise reached with the bill's sponsor, MK Fania Kirshenbaum (Yisrael Beiteinu ), the government will establish an interministerial committee headed by Justice Minister Yaakov Neeman to formulate a solution for lowering compulsory insurance rates, and will present its conclusions within three months.

The proposed law would change the way the compulsory insurance pool for motorcyclists works. Because insurance companies say they cannot provide compulsory insurance for motorcyclists at a profit, most riders are currently covered by a state-mandated pool. This pool runs at a deficit currently capped by law at 8%.

The treasury's previously proposed to raise insurance rates to cover these losses, in other words lowering the deficit to zero. Such a move would render the entire pool system superfluous, as then insurance companies would no longer lose money on motorcycle insurance. Bikers were up in arms over the potential costs - and they lobbied MKs to thwart this plan.

The new bill would set a minimum level for the deficit in the pool - in other words a minimum level of losses for the insurance. The change from a maximum deficit to a minimum deficit translates in practice into a cap on insurance rates, preventing the treasury from raising them as much as it wants. Given the present level of rates, the treasury likely would be forced to lower them under the new bill.

After the most recent insurance rate increase last November, the deficit stood at 3.9% of the total pool, down from 4.2% before the rate rise.

Kirshenbaum said motorcyclists have suffered from years of continual insurance rate increases, and her bill would put an end to it. She said the lack of a clear government policy on two-wheel vehicles has brought about a situation where bureaucrats set the policy in reality, instead of being based on such questions as how to provide cheap transportation for the young, solve traffic congestion and parking problems and provide benefits for demobilized soldiers. Instead, said Kirshenbaum, the policy is now based only on purely financial parameters.

MK Carmel Shama (Likud ), the head of the motorcyclists lobby in the Knesset, said it was unacceptable that compulsory insurance costs more than the motorcycle itself.

The committee to be headed by Justice Minister Neeman will also include Finance Minister Yuval Steinitz (Likud ), Transportation Minister Yisrael Katz (Likud ), Tourism Minister Stas Misezhnikov (Yisrael Beiteinu ), Environmental Protection Minister Gilad Erdan (Likud ) and National Infrastructure Minister Uzi Landau (Yisrael Beiteinu ).