International insurance sector wary of Israeli banks

By Shlomi Sheffer
Ha'aretz
July 30, 2002

Certain international insurance companies are categorically unwilling to insure directors at Israeli banks this year.

While other companies continue to insure, they have increased their premiums by hundreds of percents. A similar increase is expected in the premiums of policies covering the banks themselves as policies are renewed for 2003, according to attorney Tal Nahari Amrami from the Toren Insurance Agencies, which specializes in banking insurance.

Although most insurers will not admit it, the economic and security situation is a major factor in their reluctance to insure local banks.

Insurance agents face real difficulties in acquiring directors' and officers' insurance for Israeli banks for next year, Amrami said. Insurance firms that are insuring Israeli banks have limited the coverage they are willing to undertake and have raised the deductibles.

Elementary insurance rates have gone up in the last year, along with officers' and directors' insurance. While premiums in the banking sector went up 100 percent last year worldwide, things were even worse for Israeli banks.

The collapse of Trade Bank, recently discovered embezzlement at several banks and the jump in global insurance rates will push up premiums banks are likely to pay when they renew their policies, and some may even not find any insurer. All banks, small and large, are expected to encounter similar difficulties, Amrami said.