Kathmandu. Rating agency S&P expects Israel’s government-backed insurance plan to bear most of the damage related to the conflict with Iran.
Despite six days of attacks between Iran and Israel, the rating agency did not anticipate any immediate negative rating impact on Israel’s insurance or banking sector due to ongoing tensions.
S&P attributes some of this flexibility to Israeli government schemes, which bear property insurance damages directly related to the war, as well as military life insurance claims.
As a result, domestic insurance companies do not have to bear the losses due to these risks, S&P said. Although we consider israeli insurers’ significant disaster reinsurance programs to be positive, we do not expect damages to reach such levels.
With this in mind, the rating agency wrote, the most immediate impact of the conflict on insurers is likely to be seen in their investment portfolios.
The Israeli-Iranian conflict has escalated in recent days. This has led to global concerns about regional stability, international security, and potential economic implications. World leaders and markets are closely monitoring the situation.
S&P wrote in a new report that missile attacks and military attacks have caused property damage and casualties in Israel. The past 18 months have been marked by ongoing operations in Gaza, actions in Lebanon, and general economic uncertainties.
The rating agency said insurance and banking markets need to adjust to new conflicts and greater political and economic instability. “However, we do not currently anticipate a negative impact on insurance or banking ratings within Israel,” S&P said.
The rating agency further said, although total insurance growth in the Israeli insurance market in 2024 was almost constant, overall net results were strong. Improvements in technical profits and healthy investment earnings from ancillary financial markets reinforced the results.
Over the past year, Israel’s economy has proven its strength and resilience. Key microeconomic indicators and private consumption have remained relatively stable, and growth in capital markets has outperformed major global indicators.
