Zenith Insurance, the largest Gibraltar-based motor insurer in Ireland, is to stop offering car coverage in this country amid soaring claims costs in a loss-making market.
The Gibraltar Financial Services Commission "has informed the Central Bank of Ireland that Zenith, part of the Markerstudy Group, has decided to cease writing motor business in Ireland" through intermediaries it has been using, the Central Bank said in a statement.
“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.
Earlier on Thursday, Galway-based Bump Insurance, one of three underwriting agents Zenith uses to write business in Ireland, confirmed on its website it will no longer write policies on behalf of the Gibraltar insurer from February.
The other two agents are Footprint Underwriting and Prestige Underwriting Services. It is believed that the three firms, who operate between brokers and insurance companies, are seeking replacement providers of coverage.
Bump cited Zenith as saying that an “increased 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” was behind the decision to exit the motor market.
Five per cent
Zenith, which is understood to have built up a 5 per cent stake in the Irish motor insurance market in recent years, with about €50 million of premiums, will continue to do a small amount of business in this country, believed to be in motorbike insurance. The pull-back by the company, which sources said offered among the cheapest rates in the market, will add to upward pressure on motor rates in the market.
Earlier this week, it emerged Zenith was accelerating its retreat from the Irish market, but the extent of this was not clear at the time.
On Tuesday, Gary Humphreys, group underwriting director for the UK-based Markerstudy Group, which owns Zenith, said: "We continually monitor performance and rates in all areas of our business and respond accordingly. We are not completely withdrawing from the Irish market."
The group declined to comment further on Thursday.
Bump cited Zenith as saying that Ireland is “unattractive territory” in which to write motor insurance, and that “the challenge is not justified by the level of premium written” by the company, which is small compared with Markerstudy’s overall premium income of £500 million (€585 million).
Sources said last month that the Central Bank in Dublin pressed home the difficulties in the Irish market earlier this year to regulators in Gibraltar, home to 11 out of 24 foreign insurers operating in the Irish motor market. Injury claims have surged in recent years, forcing Irish-regulated companies to bolster their reserves by tens of millions of euros, while motor rates have risen by 70 per cent since July 2013.
Enterprise
Less than five weeks ago, another Gibraltar-based company, Enterprise Insurance, collapsed and declared itself "hopelessly insolvent", sparking uncertainty about how 255 Irish claims on its books, with an estimated cost of €6.2 million, will be met.
Zenith stopped writing business in June through ARB Underwriting, another insurance underwriting agency in Dublin.
ARB said at the time that Zenith cited Ireland’s difficult market, courts system and unhappiness with how the industry had been left with the cost of the collapse of Malta-based Setanta Insurance, as the main reasons for the move.
