|The Commissioner of Insurance is authorized to intervene in disputes between the insurer and the insured |
The Commissioner of Insurance was granted authority by law to regulate insurance business in Israel. Several court judgments, including one handed down by the Supreme Court in August 2006 (L.C.A. 9402/05 Clal Insurance Co. Ltd. v. The Commissioner of Insurance), have determined that the Commissioner of Insurance has the authority to decide on disputes between an insurer and an insured. He may even establish factual findings and award damages in favour of the complainant.
The Supreme Court decided that the Commissioner acts as a quasi judicial body in this respect and may decide on factual disputes without being subject to the rules of procedure and evidence. However, because the office of the Commissioner of Insurance is part of the government rather than belonging to the judicial system, the Commissioner of Insurance must make a point of upholding the principles of natural justice such as granting appropriate opportunity to the party against whom the complaint was submitted to respond to the complaint.
It should be noted that the law provides the right of appeal to the District Court on the Commissioner`s decisions regarding disputes between insurers and insureds.
Policies issued by foreign insurance companies will be construed in accordance with Israeli Law
A policy issued by a foreign insurance company should be construed pursuant to Israeli law, unless the policy expressly provides otherwise.
In the case (C.A 315/97 The Estate of Reiner v. Allianz Versicherungs Aktiengessllschaft) the District Court of Tel-Aviv decided on a claim involving mandatory automobile insurance which was issued by the defendant, a German insurance company, to a German diplomat serving in Israel.
Pursuant to German law, mandatory automobile policies only cover injuries sustained by third parties resulting from a road accident, but not the insured`s personal injury. However, under Israeli law, mandatory automobile policies must also cover the insured`s own injuries.
The German diplomat died in a road accident. His estate filed a claim in Israel against the German insurer, requesting compensation for the estate in respect of the personal injury suffered by the insured.
The policy was silent on the issue of the applicable law. The insurer alleged that the policy should be construed pursuant to German law, and therefore should not cover personal injury to the insured himself, but rather only to third parties.
The court decided that any term in a policy issued by a foreign insurer should be construed pursuant to Israeli law, unless the policy expressly provides otherwise. The use of the term "Mandatory Automobile Insurance" in the policy should be deemed to include all the risks which are mandatory under Israeli Law.
Assuming this decision is followed by other courts, we suggest that insurers, who underwrite Israeli risks and wish to apply a foreign law, state specifically in the policy. Furthermore, they should ensure that any terms used in the policy are specifically defined. Otherwise, such terms may be construed pursuant to Israeli Law. These comments are relevant to terms which have customary meaning under Israeli Law, and also to the title of the policy. Any terms restricting cover should adhere to the revisions set out in the Insurance Contract law regarding such terms.