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Questions and Answers

Q: Does Israeli law allow the filing of class actions against directors and officers of provident funds?
 
A: In February 2009 the Central District Court ruled that class actions relating to provident funds may only be brought against the management company of the fund but not against its directors and officers. For further details please refer to our article titled: "Israeli Court Severely Restricts Ability to Bring Class Actions Against Directors and Officers of Provident Funds", under the News & Publications Section of this web-site.

Q. Are Israel Insurers permitted to send Insureds to Polygraph tests, and are they allowed to rely on Polygraph test results? 
 
A: On June 10th 2008, The Israeli Insurance Commissioner (IIC) published a circular for Insurers setting out new rules for use of polygraph testing in insurance claims. The new rules determine the scope of pre-test agreements between the Insurer and the Assured, severely restricting the effectiveness of polygraph testing as a means of settling insurance disputes. The most significant of the new restrictions is the rule that polygraph results can no longer be deemed as conclusive evidence against the Assured. In addition, the rules limit the use of polygraph testing to cases where the Insurer raises a specific contention of fraud by the Assured. For further information on this topic, please refer to our article: "Restricting the use of the Polygraph (the Lie-Detector) – The Israeli Insurance Commissioner`s New Rules, under News & Publications Section of this web-site.
 
Q.  What are the main authorities of the Commissioner of Insurance in Israel?
A: The authority and responsibility of the Commissioner of Insurance to regulate the Insurance sector in Israel is set forth in the Financial Services Supervision Law (Insurance) of 1981, as amended. The main responsibilities of the Commissioner in the field of Insurance is licensing of both insurers and insurance intermediaries, monitoring the solvency of insurers, approval of master policy wordings to be used for large numbers of insureds (this applies mostly to personal lines business) and dealing with consumer complaints.
The Commissioner uses a variety of measures to supervise the insurers it regulates. This includes issuing regulations under the Supervision Law, issuing directives to insurers, issuing position papers indicating the views of the Commissioner on certain matters, issuing rulings in cases of consumer complaints and joining legal proceedings in which issues of importance are being ruled upon.  Insurers must complete detailed reports to the Commissioner which are intended to assist the Commissioner in monitoring the relevant businesses.  Auditing firms appointed by the Commissioner conduct periodic visits to the premises of licensed insurers and audit them. 
The Commissioner has wide-ranging powers.  The Commissioner can withdraw or amend an insurer’s license and can impose financial or other penalties on firms whom are found to be in breach of the Supervision Law and its regulations or any of his directives. He can also discipline the directors and those other members of senior management who have to be individually approved by the Commissioner in order to hold their positions. 
The Courts have repeatedly given broad interpretation to the Commissioner`s authority to supervise activities of insurers in Israel.
 
Q. Are Reinsurers of Israeli Cedants Subject to Israeli Jurisdiction?
A: In CF 293/03 British Aviation Insurance Group a Global Aerospace Underwriting Managers Ltd. et, al V. Elbit Systems Ltd. et, al., the Haifa District Court ruled that reinsurers are subject to the jurisdiction of the Israeli courts in the facts underlying that case. For full details regarding this decision, please refer to our article: "Reinsurers of Israeli Cedants are Subject to Jurisdiction of the Israeli Courts", under Publications.
 
Q: Under Israeli law is a foreign insurer prohibited from selling policies to Israeli insureds?
A: Pursuant to Section 14 of the Israeli Supervision of Financial Services (Insurance) Law – 1981 , foreign insurers are not permitted to engage in insurance business in Israel, unless they are admitted, namely – licensed by the Commissioner of Insurance.
Having said that, the Law distinguishes between an insurance transaction carried out in Israel with the intermediation of an Israeli broker, and an insurance transaction carried out outside Israel directly or through a foreign broker.
For further information on this topic, please contact us.
 




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