Swiss Re winding down Israel activities

The reinsurance giant is unhappy about regulatory uncertainty on the costs it will have to pay to insured clients in the health sector.

Global reinsurance giant Swiss Re has decided to significantly reduce its activities in Israel. After doing this in the pension sector, the company reported in early December in a presentation to investors that during 2025, it had taken actions that mainly involved exiting its areas of activity in health insurance and disability and work capacity loss insurance, a move that the company itself defines as a "run-off" - self-liquidation, in which it does not provide reinsurance for new and old policies that are running down.

A reinsurer is an insurance company that takes on part of the risk of the local insurance company, in exchange for a fee. In this way, the local insurance company reduces its risk and can direct capital to additional activities. If an extreme event occurs, both companies absorb the damage.

Swiss Re suffers losses - the Capital Market, Insurance and Savings Authority does not want the public in Israel to pay for it

From Swiss Re’s perspective, it is experiencing regulatory uncertainty regarding the costs it will have to pay to insured clients in the health sector, where it is forced to absorb losses, with the emphasis on drugs outside the government funded drug basket, which are becoming more expensive. These drugs prolong life and must be paid for over a longer period of time, and at the same time, patients are more easily approved to receive these expensive drugs, which can cost millions of shekels.

Market sources say, "There is no insurance company that has not raised the concern about the reinsurer leaving Israel with the regulator, the Capital Market, Insurance and Savings Authority, in the last two years. The regulator is not responding and Swiss Re simply threw up its hands and said that it is no longer willing to take on the risk."

However, the question is more complex. The dilemma facing the Capital Market Commissioner Amit Gal, is whether to allow Swiss Re to increase prices by significant percentages. According to market sources, this means a cost that could reach billions of shekels a year that will fall on the consumer - that is, it will increase the premium for the public - or that the reinsurer will reduce its activity in Israel. It seems that the Capital Market, Insurance and Savings Authority was not convinced that keeping the large reinsurer justifies the increase in prices for the public. At the same time, it should be remembered that at least for now, local insurance companies are not losing money in the health sector, so they can "manage" even without the reinsurer.

However, Israeli insurance companies have been concerned and have been warning for some time that what happened in the field of nursing care insurance, the exit of Israeli insurance companies from the field, could also be repeated in drug insurance, if the Capital Market Insurance and Savings Authority does not allow premiums to be raised.

There are those in the market who are trying to downplay the situation and stressing that this is neither a new problem nor a dramatic development. According to a senior industry official, "This is a trend that has existed for many years. Reinsurers have exited many areas in Israel that involve risks, such as compulsory car insurance, but this has not meant that there is no compulsory insurance in Israel." The source adds, "Swiss Re has not been active in the health sector for a long time, but mainly supports past policies. They are not exiting completely but are reducing their activity."

How dramatic an event is this?

One fact is indisputable. Swiss Re is the largest reinsurer operating in Israel, and by a large margin from other companies. "They are the main reinsurer in the health sector in Israel, the market relies on them. Their exit is bad news and I don't know if anyone else will step into their shoes," a market official emphasizes.

The large insurance companies say that this should not affect them, at least not at first. "The policies we market today have nothing to do with Swiss Re. They are in our old policies and they are not coming out of there," says a source at one of the large companies. A source at another large company claims that "to our understanding, there is no dramatic impact."

On the other hand, the market source explains that at least in the first stage, the move is expected to affect mainly the smaller companies active in the industry, such as Direct Insurance, Ayalon, and AIG. But this may also translate into higher premiums that the entire Israeli public will pay.

According to the source, insurance companies will now have to tie up more capital, and take on more risks, and will not be able to release it for other activities, which could lead to higher prices for policies for the public. However, this will not happen in the immediate term, since the price increase will require approval from the Capital Market, Insurance and Savings Authority.

The source describes another concern. According to him, there is a risk of harm to competition, as "The ability of small companies, which need to tie up their capital, to compete and enter such areas tends to zero. Small companies will have a very great difficulty against the large companies." It should be noted that Israel is not the only country in which Swiss Re has decided to reduce activity. It is also doing so in Australia in the field of disabilities, and in South Korea in the field of health, but it seems that the exit from Israel is the most significant action taken by the reinsurer this year.

Published by Globes, Israel business news - en.globes.co.il - on December 31, 2025.

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