OUTsurance confirms plan to enter Irish market in 2024

South African insurance company OUTsurance confirmed to its investors on Wednesday that it plans to enter the Irish market next year, targeting motor and home coverage.

The company, which also operates in Australia, said the Republic meets its investment criteria on the basis of “market size relative to existing operations, distribution dynamics favouring the direct model, historic market profitability, a familiar regulatory environment and a growing insurance market”.

An authorisation process has commenced and, if successful, a 2024 market entry is anticipated, OUTsurance said as it reported results for the six months to the end of December.

“A core part of our long-term strategy for growth and diversification is to seek an international organic growth opportunity which fits the business model and core operational competencies of the [OUTsurance group],” it said.

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The intention of OUTsurance to start operations in the Republic, first reported by The Irish Times in January, comes after six years of profitability for the motor sector, following a period of sharp losses, and a series of reforms aimed at reducing volatility and coverage costs in a historically highly volatile market.

Revolut, the neobank, also signalled this week that it plans to enter the Irish car insurance market this year, claiming that its premiums will be as much as 30 per cent cheaper than the next best provider. It has not disclosed information on who will be underwriting its products.

However, Boston-based Liberty Mutual is in the process of disposing its businesses in Ireland, Spain and Portugal in a deal that may be worth more than €1 billion. The Irish Times reported last month that Zurich Insurance Group, which has about a 10 per cent share of the Irish general insurance market, is in talks to buy the Liberty businesses being sold.

OUTsurance, one of the largest personal-lines insurers in its native market, registered two companies with the Companies Registration Office (CRO) in Dublin last year using the offices of law firm A&L Goodbody.

The average award by the Personal Injuries Assessment Board (PIAB) fell by 38 per cent in the first half of last year across motor, public and employers’ liability lines compared to the same period in 2020, before new judicial awards guidelines were implemented. There has also been a sharp decline in the number of High Court personal injury cases being lodged since the guidelines took effect in April 2021.

Meanwhile, the Central Bank imposed a ban last July on the previously widespread practice of motor and home insurers increasing premiums for loyal customers by stealth.

Insurers made a €176 million profit from motor insurance in 2021 – equating to 13 per cent of €1.35 billion of gross earned premiums, according to Central Bank data. Both figures were the highest for a full year since at least 2009 and contrast with a period in the middle of the last decade when motor insurers made large losses, which prompted a spike in premiums.

Profits in motor coverage in recent years have partly been used by general insurers to subsidise loss-making underwriting of public and employers’ liability, and commercial property insurance.

Aviva Insurance Ireland, one of the three largest general insurers in the State, said earlier this month that its average motor premiums declined by 9 per cent to 2022, and have fallen by 40 per cent from their peak in 2016. FBD said its private motor rates declined by an average of 7.2 per cent last year.