Insurance Agency

Industry data

There are two active types of businesses in the industry.

  • Insurance companies- there are currently 26 registered insurance companies  in Israel.
  • Insurance agencies and agents. In 2004, over 9,000 licensed insurance agents were registered, of them 7,700 certified, and the rest interns. These agents operate either as independent agents, or on behalf of one of 920 registered insurance agencies.

 

Industry Sub-division

The insurance industry is divided into four main branches: life insurance, elementary insurance, health and support insurance, marine and air insurance. 

 

Customers: Defining the Target Market and its Size, Market segmenting

As a rule, almost everyone in the country, whether a private person, a business, a public institution, or any other type of organization, needs insurance services and is insured by some type of insurance, usually more than one. Potential customers may be divided to two main sectors- private and corporate.

 

Competition

Competitors in the industry can be divided into a number of groups:

  • Insurance agencies and independent insurance agents.
  • Direct insurance companies working directly with the customers with no agent mediation.
  • Other insurance organizations (working alone or in cooperation with the insurance industry) such as Kupot Holim, in the health insurance branch, or mortgage banks in the apartment and mortgage insurance branch.
  • Financial and bank bodies working as competitors across plans combining savings (especially financial insurances.)

Competition in the industry, both between insurance companies and between the various agents, is difficult. This situation stems from a large number of insurance agencies and insurance agents, and from relatively small differences between the various policies offered by companies. In recent years, the branch has suffered from capital erosion, a trend that affects the agent and is reflected in truncation of commissions and difficulty recruiting customers.

 

Marketing resources

Resources that characterize independent agents and small agencies:

  • Direct approach
  • Utilizing of existing social circles (family and friends)
  • Periodically approaching existing customer repository in an attempt to sell additional insurance.
  • Offering peripheral services
  • Advertising in local print
  • Producing promotional materials
  • Emphasizing service and personal customer care.

 

 

 

 

Factors Affecting Success:

The agent’s ability to build a repository of regular customers in a short initial period.

 

Entry Barriers:

Successfully passing the Ministry of Finance exams according to the specific branch of insurance.

 

Human Resources:

In order to operate as an insurance agent, one must successfully pass the Ministry of Finances exams and receive a license. An independent insurance agent usually works alone. Human resources required for an insurance agency aside from the agents is mostly administrative.

 

Required Equipment:

Office equipment, according to the size of the office. In recent years alongside advancing technology, insurance companies require agents to have an on-line link to company computers, and thus be able to receive insurance offers and/or insurance certificates in a relatively short time.

 

Industry revenue and profitability

Insurance agents’ revenue is based on commission received from the company for policies sold. Commission rates vary according to the type of insurance and the agent’s contract with insurance companies he works with. Commission percentages in the life and elementary insurance branches are decreasing and thus, forcing the agent to continually amplify sales, in conjunction with saving and caring for existing accounts in order to maintain a steady income.

 

Typical Terms of Payment

There are two methods to transfer premiums to the insurance company between the company and insured party: direct transfer or indirect transfer. Payment transfer can only be conducted by using check, credit card, or a standing order.

Between the insurance company and agent:

Each month, commissions are calculated and the agent’s account is credited for that amount. In some cases the companies are willing, at the agent’s request, to allow advances on these wages.

 

 

Risk Level:

Risk level for a new entrepreneur establishing an insurance agency is not high. Main risk is the loss of initial investment and the alternative price paid for the learning process.

 

Licenses and Certifications:

Only a licensed insurance agent may practice. There are four types of licensees in this occupation: life insurance, property insurance, accident insurance, and marine insurance. In addition, there are two licensing levels- intern and certified.

 

 

Relevant Addresses:

Israeli Insurance Agent’s Beurau, Ha’Masger 18, Tel-Aviv. Phone: 03-6396676, Fax: 03-6396322. Internet website: www.insurance.org.il.

Insurance companies’ union in Israel, Rotschild 29, Tel Aviv. Phone: 03-5677333.

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