IDI Insurance: Why Motor Liability Still Eats Into the Motor Franchise
IDI's motor liability book still grew in 2025, but underwriting turned negative and the Pool alone cost NIS 29.3 million. Until pricing, National Insurance transfers, and reinsurance normalize, this line will keep eating into the profit created by motor property.
Why This Thread Matters
The main article argued that IDI once again looks like an underwriting-led insurer. This follow-up isolates the one part of the motor franchise that still refuses to behave like clean insurance economics. Motor liability is where almost every distortion meets: pricing that does not fully clear actuarially, Pool losses, fixed transfers to the National Insurance Institute, reinsurance retreat, and the commercial need to keep selling the product alongside motor property.
The important point is that this is not a demand problem. In 2025 gross motor-liability premiums rose to NIS 715.6 million from NIS 687.7 million a year earlier, and excluding the Treasury tender the company shows 8% annual premium growth plus 5% growth in policies sold excluding Pool business. Yet insurance-service result swung from a profit of NIS 18.8 million to a loss of NIS 12.8 million, and total pre-tax loss widened to NIS 24.6 million from just NIS 2.7 million in 2024. That is the core issue. IDI is selling more of the product, but the product still does not pay for itself.
The Numbers That Matter
| Metric | 2024 | 2025 | What actually changed |
|---|---|---|---|
| Gross premiums in motor liability | 687.7 | 715.6 | The line is still growing |
| Insurance-service result | 18.8 | -12.8 | Core underwriting flipped from profit to loss |
| Total pre-tax loss | -2.7 | -24.6 | The pressure is now visible in the line's economic outcome |
| Pool impact on retained pre-tax result | -29.6 | -29.3 | The Pool drag stayed very heavy |
| Total pre-tax profit in motor property | 235.1 | 273.8 | The profitable part of the motor franchise kept working |
This chart matters because it separates noise from structure. The Pool hit barely changed between 2024 and 2025, so the deterioration did not come only from there. It also came from the direct book: higher claim costs, higher indirect claim expenses, and, in the company's wording, the disappearance of the positive 2024 benefit from updating the Pool risk-margin assumptions. In other words, 2025 did not just expose an old problem. It showed that the line is struggling to generate underwriting profit even before the Pool bill arrives.
Where The Economics Break
Pricing Still Does Not Clear Actuarially
IDI says this almost explicitly: it is not allowed to market motor liability at rates it views as actuarially adequate. Pricing is based on a closed list of parameters, while the regulator effectively imposes a ceiling derived from Pool tariffs. When that ceiling is too low, premium growth does not solve the problem. It simply increases activity in a line that was underpriced to begin with.
That explains why sales growth did not translate into better economics. In 2025 the company sold more motor liability, but every new policy entered a framework where price still does not sufficiently reflect risk and expense structure. When that happens in compulsory motor liability, the top line looks healthier while the economic line looks worse.
The National Insurance Transfer Has Become A Market Tax, Not A Book-Specific Charge
From the start of 2025, the transfer from premium to the National Insurance Institute stood at 10.95%. The problem for IDI is not only the level. It is the structure. The transfer is set on a market-average basis even if the company's own book historically carried a lower subrogation burden than the average. The company also stresses that the regulator did not approve a matching tariff increase when the transfer rate went up.
That creates a real gap between a priced book and a collected book. If the company's claims experience differs from the market average but the transfer is still based on the market average, part of the premium stops being risk price and becomes a value transfer. It does not show up like a claim. It shows up like a built-in deduction from premium.
Pool Is No Longer Peripheral, And It Still Eats The Result
The company describes a Pool that has moved away from the original idea of residual insurance for edge cases. In the business description, about 47% of Pool insured vehicles in 2024 were already non-motorcycles, and the company says that trend continued in the report year. At the same time, IDI argues that the Pool deficit cap was not updated to reflect that mix shift, and that the uniform National Insurance transfer creates an additional hidden subsidy for Pool losses.
At the bottom line, that is already a large number. The effect of the Pool on the company's retained pre-tax result was a loss of NIS 29.3 million in 2025. Since the entire motor-liability line posted a total pre-tax loss of NIS 24.6 million, the rough arithmetic says the line would have been around break-even and even slightly positive without the Pool. That is not comfort. It simply shows that the Pool is not a side issue. It is the piece that consumes an already thin margin.
This chart shows why the motor franchise cannot be read as one clean block. Motor property creates most of the value while motor liability subtracts from it. As long as the two lines are sold almost together, the consolidated reading of a strong motor engine remains incomplete.
Reinsurance Stepped Back, So More Risk Stays In-House
The company writes that for years it transferred most of the risk in this line to reinsurers, but after repeated losses the cover kept shrinking from 2021 onward, and in the report year the agreement was not renewed. That matters because it changes not only the level of profit, but its quality. If a troubled line no longer benefits from meaningful reinsurance protection, more of the volatility and tail risk remain inside the company.
That means that even if motor liability gets closer to break-even on a running basis, it may still remain the weaker line in terms of result stability. That is the difference between a line that manages not to lose money and a line that actually produces good economics.
Why IDI Cannot Simply Turn Off The Product
The answer sits in the link to motor property. The company itself says most customers tend to buy motor liability and motor property from the same insurer, and therefore judge price and service across the two products together. The numbers are even sharper: 99.5% of IDI's motor-liability customers also held motor-property coverage in 2025, while in the other direction 94.3% of motor-property customers also held motor liability.
That means motor liability is no longer a line that stands on its own. It is close to being a condition for keeping the motor customer. The investor presentation says it plainly: motor liability is a complementary product to motor property. Walking away from it would therefore not be a clean underwriting decision. It could mean giving up the front door to the line that is actually profitable.
That is where the broader thesis comes from. Motor liability does not only consume its own result. It consumes part of the value created by motor property because the company keeps it inside the motor package to protect customer value, sales access, and the franchise economics of the property line. The product stays in the system even when its standalone economics are too weak.
What First Read Can Miss
It is easy to look at the fourth quarter and see that motor liability still posted a total pre-tax profit of NIS 5.9 million. But in the company's presentation, on an insurance-service-result-less-opex basis and excluding the Treasury tender, the quarter itself had already moved to a NIS 6 million loss versus a NIS 9 million profit in the comparable quarter. In other words, even when the headline line stays positive, the core is already not.
That gap matters because the next question is not whether motor liability can print a positive quarter with help from investment income or financing movements. The question is whether the line can go back to earning money from insurance. Until that answer becomes clearer, the motor franchise remains strong on top, but leaky underneath.
What Has To Change Next
For motor liability to stop eating into the motor franchise, the company does not need a miracle. It needs a fix in at least one of four layers: pricing that reflects risk, a National Insurance transfer mechanism that does not impose a market average on a different book, Pool economics that absorb less value from commercial insurers, or the return of reinsurance protection on reasonable terms. Without one of those changes, better direct underwriting alone probably will not be enough.
So this is not just a question about one insurance line. It is a question about the quality of IDI's motor earnings. As long as motor property creates and motor liability absorbs, the company will keep a strong motor franchise, but one that still burns part of its power just to preserve the product that has to be sold alongside it.
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