Chapter Four: Control of Insurance Business

 

Article One: Limitations on Conduct of Business

 

35. The Minister of Finance may, with the approval of the Finance Committee of the Knesset, enact by regulations, for all Insurers or particular categories of Insurers, provisions as to a minimum issued and paid-up share capital and a minimum surplus of assets over liabilities.

 

  Minimum Capital
36. (a) The Minister of Finance may enact by regulations,  generally or for particular categories of Insurers, and for all or particular branches of Insurance, provisions as to:

(1) the categories of assets which an Insurer will hold against the different categories of liabilities, and the ratios of assets to liabilities;

(2) modes of holding assets against liabilities;

(3) the cases in which an Insurer may invest in  its subsidiary, it is the holder of any means of control, in another Insurer or in an Insurance Broker;

(4) the duty of an Insurer to hold Insurance reserves and the modes of calculating them;

(5) carrying on Insurance business  abroad;

(6) the minimum rate of the share of the risk to be borne by Insurers in Israel;

(7) the maximum rate of the share of the risk to be borne by an Insurer;

(8) loans and guarantees which an Insurer may grant and the amounts thereof;

(b) Regulations under subsection (a)(8) will be enacted after consultation with the Governor of the Bank of Israel.

(c) The Commissioner may, for special reasons which he will specify in detail, impose on a particular Insurer, for a specific period, additional limitations to those prescribed in regulations under subsection (a).

 

  Provisions as to Conducting Business
37. (a) The Minister of. Finance may enact by regulations, for all or particular branches of Insurance. provisions as to –

(1) the rates of Insurance premium and other payments which an Insurer is permitted to collect from insured persons, including maximum and minimum rates and the payment of premium by installments;

(2) the duty of an Insurer who states Insurance premium under a credit scheme to inform the Insured in advance in the manner prescribed. of the credit terms and the cash terms, of the rate of interest charged, based on an annual calculation under the credit scheme, and of the rates and periods of payment of premium under the credit scheme.

(b) Regulations under subsection (a)(1) require the approval of the Finance Committee of the Knesset.

 

  Provisions as to Insurance Premium
38. (a) The Minister of Finance may enact by regulations, for all or particular branches of Insurance,  provisions as to conditions of a contract of Insurance and the wording of such conditions. Any conditions conflicting with a condition prescribed under the regulations as aforesaid will not be followed, and the condition required to be prescribed as aforesaid will be deemed to have been stipulated instead, unless the alternative arrangement is in favour of the Insured. This provision will not derogate from the economical responsibility of the Insurer.   Provisions as to Conditions of Insurance
(b) Regulations under this section will not conflict with a provision which according to the Insurance Contract Law 1981 should not be stipulated against.

 

   
39. (a) The Minister of Finance may enact by regulations, for all or particular branches of Insurance, provisions as to the structure and form of an Insurance policy, including underlining particular conditions, and including the minimum size and shapes of all or some the letters of an Insurance Policy.

(b) The Commissioner may require of an Insurer that a particular detail of the policy be specially underlined as he may direct.

 

  Form of the Policy, and Prominence of Terms (Amended 1995)
40. (a) An Insurer who wishes to introduce an Insurance scheme the details of which have not been submitted to the Commissioner under section 16 or to alter conditions of Insurance, or Insurance premium and other payments, the details of which have been submitted to the Commissioner as aforesaid will submit to the Commissioner notice to such effect ten days before the change occurs.

(b) In branches of insurance specified by the Minister of Finance in a decree, an Insurer will not introduce any scheme or changes referred to in subsection (a) unless the Commissioner has permitted the same.

(c) In an order referred to in subsection (b), the Minister of Finance may designate categories of business or changes to which the duty of obtaining a permit will not apply and also categories of business in which the Insurer may introduce any scheme or change referred to in subsection (a) if the Commissioner does not notify the Insurer of his objection within 30 days from the day on which he received notice of the scheme or alteration.

 

  Alteration of Conditions of Insurance
41. (a) An Insurer or Insurance Broker will not receive Insurance business through any person unless such person is a licenced Broker and entered into a written agreement as referred to in section 30.

(b) An Insurer or Insurance Broker will not pay brokerage commission for broking between it or him and any person save to a person who is a licenced broker.

(c) The provision of subsection (b) will not prevent the payment of brokerage commission to the heirs of a deceased Insurance Broker in respect of life Insurance effected by him as an Insurance broker or in respect of other Insurances renewed within two years from the date of his death .

(d) The Minister of Finance may, in consultation with the Committee, enact by regulations, generally or for particular classes of Insurers or Brokers, and for all or particular branches of Insurance, provisions as to the maximum brokerage commission an Insurer is permitted to pay to an Insurance Broker.

(e) For the purposes of this section, ‘brokerage” means any commission, remuneration, contribution to expenses and any other benefit, all either direct or indirect.

 

  Receiving Business and Payment of Commissions (Amended: 1981)

 

 

Article Two:  Financial  Reports

 

42. (a) An Israeli Insurer will prepare its annual audited financial report, for the period ending the 31st December of every year and will submit it to the Commissioner by the 31st March  following.   Report by Israeli Insurer (Amended 1987)
(a1) An Israeli Insurer will prepare audited financial reports, for the last day of the first, second and third quarter of each year, and will submit it to the Commissioner within two month form the end of each quarter. In this section – “quarter” is a period of three month ending at the last day of the third, sixth, ninth and twelfth month of each year.    
(b) An Israeli Insurer having a subsidiary company, will submit to the Commissioner, together with the report referred to in subsection (a), an annual financial report of the subsidiary company for the period ending the 31st December and a consolidated financial report of itself and the subsidiary company. For this purpose, “subsidiary company” means a company in which the Insurer holds more than fifty per cent of the nominal value of the issued share capital or more than fifty per cent of the voting power or has the right to appoint one half or more of the directors or to appoint the general manager.    
(c) The Commissioner may, for reasons which will be recorded, exempt an insurer from the duty of submitting a report of a subsidiary company which its business is not in Insurance or from the duty of submitting a consolidated report of itself and all or part of its subsidiary companies.

 

   
43. (a) A foreign Insurer will prepare an audited annual financial report, relating to its business in Israel for the period ending the 31st December of every year and will submit it to the Commissioner by the 31st May following.   Financial Report by Foreign Insurer
(a1) A foreign Insurer will prepare an audited quarterly  financial report, and will submit it to the Commissioner within two month of the end of each quarter.    
(b) In addition to the report referred to in subsection (a), a foreign Insurer will submit to the Commissioner a financial report on its business in Israel and outside Israel, prepared and certified in accordance with the law in force at its place of incorporation, within 30 days from the day on which it is submitted to the appropriate authority in the foreign state or from the day on which it is published. whichever is the earlier .

 

   
44. An Insurance Broker being an incorporated entity will prepare an audited annual financial report, for the period ending the 31st December of every year and will submit it to the Commissioner by the 30th April following.

 

  Financial Report by Incorporated Entity
45. The Commissioner may, for reasons which will be recorded, permit an Insurer or Insurance Broker to draw up an annual financial report for a period ending on a different date from the one stated in sections 42 to 44.

 

  Different Date
46. The Minister of Finance may enact by regulations provisions as to the contents, degree of detail, and as to the principles of accounting to be applied in the preparation of the annual, as well as quarterly, financial report of an Insurer or incorporated Insurance Broker, including the declarations and explanations to be attached to it.

 

  Particulars of Report (Amended: 1987)
47. (a) An Insurer will publish for, the general public, a financial report in according with section 42 or 43 in such manner and form and to such extent as the Commissioner may direct.

(b) An Insurer will permanently present, in a noticeable place at its main office and at every branch office in Israel, copies of the annual reports of the previous two years, as well as copies of the quarterly reports of the previous years published under subsection (a).

(c) The Commissioner may exempt an Insurer who has ceased to accept Insurance business from the duty of publishing a report under this section and may prescribe different modes of publication where the publication of the report is not a matter of public interest.

 

  Publication of Financial Report  (Amended 1987)
48. (a) An Insurer will notify the Commissioner in writing of any changes of directors or officers within twenty-one days from the day of the change.   Changes in Management
(b) An Insurance Broker being an incorporated entity will notify the Commissioner in writing of any change of directors or officers, or of persons carrying on broking on its behalf, within twenty-one days from the day of the change.

 

   
49. (a) An Insurer or Insurance Broker against whom winding-up or bankruptcy proceedings have been instituted will notify about it to the Commissioner without delay.

 

  Winding – up and Bankruptcy
50. (a) The Commissioner or a person authorised by him for that purpose may require from any Insurer or Insurance Broker and any of their director or officer to deliver to him any information or document relating to Insurance business handled by them, including statistical and actuarial reports, and to produce to him or to his representatives any book, account, certificate or other document in their possession relating to their Insurance business.   Delivery of Information and Documents
(b) A person will not disclose any information or document delivered to him under this section unless the Commissioner deems the disclosure necessary for the purposes of criminal proceedings for an offence under this Law of a hearing in the Committee.

 

   
51. (a) A person who does not submit a report as provided in sections 42 to 44 or does not deliver any information or document at the time he is required to do so under section 50 will be fined an amount of 200 Shekels in respect of every day of delay unless the time is extended under section 103.   Fine for Non – Submitting a Report
(b) The Commissioner will send a notice of the fine to the person on whom it has been imposed.    
(c) The Taxes (Collection) Ordinance will apply to the collection of the fine.

 

   
52. (a) The Commissioner may reduce or waive the fine if it is proved to his satisfaction, on reasoned application submitted within thirty days from receiving notice of the fine, that the delay in submitting the report was not caused by any act or omission over which the person liable to the fine had control.   Authority of the Commissioner to Reduce the Fine
(b) Where the Commissioner refuses the application, he will notify his reasoned decision to the applicant.

 

   
53. (a) The imposition of a fine under section 15 will not derogate from the criminal liability of the one  required to submit the report. Where the Commissioner waives the fine, a criminal action for non. submission of the report will not be brought against the one required to submit it.   Saving of Criminal Responsibility
(b) Where a criminal indictment for non-submission of a report is filed against the one required to submit it, he will not be required to pay the fine under section 51, and if he has paid it,  the Commissioner will direct that it will be refunded to him. .

 

   

 

Article Three: Separation of Life Insurance Business

 

54. (a) An Insurer which was authorised to carry on life Insurance business will, in respect of this business, keep a separate accounting system, hold separate assets to cover liabilities and enter into separate reinsurance contracts.   Accounts and Assents to be Kept Separately
(b) Assets and rights held to cover liabilities of an Insurer in life Insurance and reinsurance for such liabilities, will be used to cover the same. Where any assets remain after the discharge of all such liabilities,  the surplus will be used to cover other liabilities of the Insurer.    
(c) The provisions of subsection (b) will also apply in execution proceedings against an Insurer and in winding-up proceedings of an Insurer.    
(d) The Minister of Finance may enact by regulations provisions regarding the separation of the accounting systems and of the assets.    
(e) In this section, “Life Insurance” means Insurance in which the event insured against is the death or attainment of a certain age of the insured or some other person or some other event in his life, and includes accident, sickness and invalidity Insurance which is part of or a regular addition to a life Insurance policy.