In 1997 a reform was enacted in the field of CMBII (compulsory motorcar bodily injury insurance) in Israel, which included a decision to cancel the system of dictated tariffs and open the market up for competition. To comply with the reform, insurance companies were required to take various measures mainly in the computerization and IT areas.
Information systems and infrastructure are critical elements in the proper functioning of an insurance company. Modern IT contributes directly to an insurer’s competitiveness and to the stability of the insurance industry as a whole.
Consequently, the Regulator instructed the industry to create a single central Database that contains all related information, which would enable insurers to price risk effectively and accurately. The Database has become a tool for safeguarding the stability of insurance companies while offering fair tariffs to the insured.
In 1999 a tender was published to select a vendor who would establish the Database, operate and manage it. The vendor’s tasks would be as follows:
- Maintain and upgrade the statistical plan and the risk classification plan
- Accurately define and design the data requirements
- Perform the necessary actuarial processes, produce reports and deliver them the system’s users
The tender was won by ISO (Insurance Services Office of Israel, Ltd.), henceforth "The Former Operator"), which created the Database and operated it from January 1st, 2001 to December 2009.
Under a tender published at the end of 2009 and early 2010, Ron-AI was selected to operate the Database and has been fulfilling this task since April 1st, 2010, starting with Q1 2010 data.
Database Operator – Main Activity
As a part of the ongoing operation of the database, the Database operator is responsible for contacting insurance companies on a regular basis, then for receiving and auditing the reports they are required to produce. The operator's personnel comprise actuaries, statisticians and professionals in the field of insurance and data processing whose job it is to measure risk in various categories; make recommendations to the Regulator on the different types of insured profiles; and continuously refresh the statistical plan and risk classification plan.
In addition to the mandatory services stipulated by the terms of the tender, the operator may also provide insurance companies with actuarial and statistical processing services for other insurance branches, based on the specific data of each company.
Database operator’s terms and conditions
According to the terms of the tender, costs related to the Database are paid by participating insurance companies. Actual amount payable to the operator is proportional to the share of data of each such company, all subject to regulation. The operator is allowed to offer services other than those required by the tender terms, and any revenue generated by these services remains with the operator - subject to approval by Regulator of Insurance.
The license term of the selected operator is 3 years, extendable by two more optional periods of 3 years each (6 years in total), at the discretion of the MOF.