Ireland's largest Gibraltar-based insurer is pulling out of the motor market
One of Zenith Insurance’s local underwriting agents said high claims were behind the withdrawal.
THE LARGEST GIBRALTAR-BASED insurer currently active in Ireland is set to pull out of the local car insurance market.
Zenith Insurance, part of the UK Markerstudy Group, will stop writing motor insurance policies through its Irish underwriting agents from February 2017, citing rising claims for the decision.
The news was confirmed in a statement from Bump Insurance in Galway, one of three agents the insurer uses to sell policies in Ireland.
The Central Bank of Ireland announced that the Gibraltar Financial Services Commission has informed it of Zenith’s decision to cease writing motor business in Ireland.
“We have been advised that existing motor policies remain valid until the next renewal date and claims will continue to be processed as normal,” it said in a statement.
Bump Insurance said that Zenith’s decision to withdraw from the car insurance business in Ireland was due to a number of factors, including:
“…increasing regulatory burden, a lack of engagement with us by Irish industry bodies, which we believe creates a market disadvantage for us and our partners, and finally the uncertain legislative environment.”
‘Unattractive territory’
The statement from Bump said these factors “make Ireland an unattractive territory in which to underwrite motor insurance business” and that the “challenges (are) not justified by the level of premium written in Ireland” by Zenith.
“Greater effort should be made to overcome the barriers to entry for financially strong companies to the Irish market,” the statement said.
“In addition, the inability to trade on a level basis requires detailed examination and remedy.”
Bump said that it will continue to accept “new and renewing” business, and that cover remained effective for policyholders until the expiry date with any policy amendments will be managed as normal.
Fora has contacted Bump Insurance for comment, while the Markerstudy Group declined to comment when approached.
However the group’s underwriting director, Gary Humphreys, previously told the Irish Times that Zenith will not completely withdraw from the Irish market, with the firm reportedly continuing on with motorbike insurance.
The other two agents Zenith uses, Footprint Underwriting and Prestige Underwriting Services, have yet to put out statements on the issue.
Today’s announcement follows weeks after another Gibraltar-based motor insurer, Enterprise Insurance Company, announced that it was winding up its operations in Ireland, affecting 14,000 Irish customers. Gibraltar is home to almost half of the foreign insurers that operate in the Irish market.
The Enterprise Insurance collapse was announced on the same day that the government published a report on how to protect motorists in the case of an insurer folding.
It called for coverage of the Insurance Compensation Fund to be extended to include third-party motor insurance claims in the event of an insurer being liquidated.
Spiralling premiums
The latest developments comes amid fast-rising insurance costs, leading to calls for legislation to tackle the issue.
Premiums have risen more than 38% in the year to July, according to the latest CSO figures, while costs have gone up a staggering 62% since the end of 2011.
Many businesses have reported being quoted two- or three-fold increases on their policies.
Insurance Ireland, the main lobby group for the sector, has put price increases down to a rise in claims and the cost of payouts going up, but others have blamed firms for pushing down premiums to unsustainable levels in previous years.
Note: This story has been updated to include a statement from the Central Bank of Ireland.
