Phoenix to pay NIS 74 million to policyholders in settlement over unpaid interest

The Tel Aviv District Court approved a settlement agreement whereby insurance company Phoenix will pay NIS 74 million to its policyholders, following a class action suit claiming that the company refrained from adding interest on insurance benefits paid late.

The Tel Aviv District Court approved a settlement agreement whereby insurance company Phoenix will pay NIS 74 million to its policyholders. According to reports, the settlement addresses the failure to pay interest differentials on insurance benefits paid late.

The suit was filed against insurance companies Phoenix, Migdal, Harel, Menora Insurance and Clal Insurance. According to the plaintiffs' claims, insurance companies refrain, as a matter of policy, from adding interest on insurance benefits paid out by them in all insurance branches, in all types of insurance and in all insurance policies without exception, contrary to the provisions of Section 28(a) of the Insurance Contract Law.

This concerns delayed payments beyond 30 days, the deadline by which insurance companies are required to pay compensation. According to the plaintiffs' claims, interest amounts accrued from 30 days after the date of claim submission until the date of actual payment belong to policyholders, but for years insurance companies have retained these funds, which accumulate to huge sums, in their coffers.

As part of the agreement, the issue of interest payments in the future by the companies on matters underlying the proceedings was also settled, and it was recommended that the companies pay the plaintiffs attorney fees of NIS 15.5 million before VAT. Phoenix noted that the company has provisioned the aforementioned amount on its books, so the ruling does not change its financial results.