Insurance Company Faces Financial Impact from Class Action Lawsuit

Significant Revenue Impact Expected

Leading insurance provider, ביטוח ישיר (Direct Insurance), announced on Sunday that it anticipates a potential loss of approximately 28.5 million shekels ($7.9 million) before tax during the third quarter due to a class action lawsuit. This amount is in addition to a preliminary reserve of 7 million shekels that the company has already allocated to cover potential liabilities related to the case.

Details of the Lawsuit

The class action lawsuit, determined by the Central District Court, requires the company to refund part of the premiums paid by some customers, including adjustments for linkage and interest. Affected customers are those whose vehicle insurance policies were renewed between 2005 and 2011 without their consent.

In its financial report, ביטוח ישיר stated that based on the criteria established by the court for identifying eligible clients, the company expects to increase the total reserves for this lawsuit in its financial statements for the third quarter of 2025 by 28.5 million shekels before tax, equating to about 18.5 million shekels after tax. This is on top of the existing reserve of roughly 7 million shekels already recognized in the company’s files.

Court Directive and Financial Analyst Insights

The Central District Court also issued a stay of execution regarding its ruling until the Supreme Court decides on a pending appeal by the company. The company’s assessment regarding this reserve remains based on estimates as of now, with no certainty as to what the final judgment from the court will be, depending on the expert’s conclusions.

Furthermore, it is noted that this assessment has not yet been reviewed by the external auditor and has not received validation from authorized company officials as part of the approval process for the financial statements for the third quarter of 2025.

For context, ביטוח ישיר reported a net profit of 101 million shekels in the second quarter of 2025.

Future Forecast and Industry Impact

2025 is anticipated to be an exceptional year for the company, with lower yields projected for the upcoming year. Industry analysts are monitoring the situation closely, as the case highlights potential vulnerabilities in the regulatory frameworks governing customer consent for insurance agreements.

Meta Description:
Direct Insurance reports a potential financial hit of 28.5 million shekels due to a class action lawsuit requiring refunds for customers impacted by unauthorized policy renewals from 2005 to 2011.

Tags:
Insurance, Class Action Lawsuit, Financial Reporting, Customer Consent, Vehicle Insurance, ביטוח ישיר, Economic Impact, Legal Decisions

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