Isracard is allowed to market savings policies and investment provident funds
Posted on Aug 26, 2021 by Ifi Reporter
Isracard has received approval from the Capital Market Authority to market savings policies and investment provident funds. This is an extension of the existing credit card company's license to market savings products alongside marketing insurance to its customers.
Leaving Ishacard CEO Ron Wexler has so far not negotiated with investment houses that manage savings policies and investment provident funds. His successor, Ran Oz, the current CEO of Migdal, will probably be responsible for further developing the marketing of savings products (some of which are managed by Migdal). The development of the activity is still conditional on the approval of the Supervisor of Banks.
The savings policy industry is estimated to manage NIS 75 billion. So far, the insurance agents have been the main distributors of the savings policies while they derive an estimated NIS 350 million a year from marketing these policies.
Max, like Isracard, is a new player in this field after receiving the license to market these policies in April this year.
Investment provident funds were launched in 2016. The main tax advantage of these funds is the possibility to redeem the fund after retirement without having to pay capital gains tax. Despite the advantage, five years after its launch, the industry manages NIS 27.7 billion, less than half of the volume of assets managed in the savings policies.
The main problem of the investment provident fund industry is that unlike savings policies, there is no one who markets them directly or exclusively. Banks prefer that customers leave the funds in the bank's managed account and insurance agents prefer to market the savings policies while deducting a fat commission. Thus, provident funds are mainly marketed directly by investment houses while investing in advertising and marketing. Isracard and Max can enter this gap. Credit card companies are allowed to engage in the insurance business following the benefit provided by the Strum Committee. The committee determined that the banks' ownership of the credit card companies should be separated in order to increase competition in the credit industry. In exchange for separation, it was decided that the credit companies would be able to offer customers products other than credit such as insurance and savings management.
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