Of all the challenges in insurance — specifically group insurance? | By Dr. Udi Frischman

Heavy and complex challenges stand before the Capital Market Authority: the future of long-term care insurance, financing of new drugs and treatments, rising prices of health insurances, adaptation of the medical insurance world to medical advancement, genetics and several more. Each of these topics necessitates deep thinking, resources and managerial attention. Against this background, the intention to increase regulation on group health insurances raises a simple question: why? One of the central justifications for supervision is the power gap between the single insured, the individual insured, and the insurance company. An ordinary person finds it difficult to understand the full terms of the policy, to conduct negotiations on coverage and price and to stand up for his rights at a time of illness. Here the regulator’s presence is required. In group insurance, and certainly in large and organized groups, the balance of power is different. Facing the insurance company stands an organization possessing knowledge, experience and resources. This is certainly true for organizations of the scale of the Electric Company and Israel Aerospace Industries, but also for medium and smaller organizations that often make use of expert and experienced consultants and can protect the rights of the insureds well. This is after all the basic advantage of group insurance: to concentrate the power of the insureds and give them bargaining power that each of them does not have separately. The Authority’s own data also deserve attention. In 2024 the claims to premium ratio in the field of medical expenses in group insurance stood at 89%, compared to 50% in individual insurance. This figure does not prove that everything is perfect, but it definitely requires an explanation before deciding to weigh down specifically on the group mechanism. But before adding requirements, approvals and reports, it is appropriate that the Authority present the problem: what is the failure that was found? What is the scope of harm to the insureds? How will the new instruction solve it, and what will its cost be? Regulatory time is also a limited public resource. Every resource dedicated to additional regulation in one field comes at the expense of handling another field. When long-term care needs a long-term solution, and when new treatments and expensive drugs pose an ever-growing financing challenge, it is hard to understand why group insurance receives additional attention without a clear failure being presented to the public justifying it. To this day, unfortunately, the regulator’s intervention in the matter of health insurances has never brought good tidings, not in improving insurance coverages, not in lowering the premium and not in improving competition. The test of a good regulator is the ability to identify where his intervention will benefit the public most of all – and to concentrate his efforts there.