The British insurer General Accident plans to enter the Irish life assurance market early next year in a move which will intensify competition. The company, which is the 10th-largest life assurer in Britain, plans to open a life office in Dublin in March. General Accident plans to sell through brokers. Its move into the Irish market is part of the company's ongoing expansion into European markets. The development follows the £273.6 million acquisition by Bank of Ireland last week of the New Ireland life company, which sells through brokers and its own direct sales staff.
General Accident has been in the general insurance market in Ireland for more than 100 years and has built up a strong broker network. The general operation has 280 employees and produced premium income of £69 million for 1996. It is the seventh-largest general insurer with a 5.9 per cent share of the market in which 21 companies compete.
The company has now got approval to expand its life operation into Ireland from the Department of Trade and Industry in Britain. It has applied for approval from the Department of Enterprise, Trade and Employment. "Subject to approval from the Department, we plan to open in March. We plan to launch in the Irish market as part of our general expansion in Europe," the acting manager for Ireland, Mr Stuart Purdy, told The Irish Times.
Asked why the company was coming into an intensely competitive market, Mr Purdy said: "The Irish economy is so strong, there are opportunities for companies which can control costs and get their distribution right".
General Accident has acquired headquarter premises in Ballsbridge in Dublin and will start to recruit 30 to 35 staff immediately. The company wants to achieve a market share of between 7.5 per cent and 10 per cent to get economies of scale. Stating that he was not able to put a timescale yet on achieving this level of market penetration, Mr Purdy commented: "It is an achievable objective for us given that fewer companies operate in the broker market in Ireland than in the UK. If we launch products that catch the imagination of the brokers and their clients, we can build market share quickly".
Brokers generate 51 per cent of new life business in the Irish market. General Accident had focused on broker distribution in all of its European markets and had developed expertise in this area, Mr Purdy said. Distributing through brokers "gives the client the advantage of expert advice and gives us good distribution and good control over costs", he said. The company is coming into a market where 20 life companies compete for annual premium income of £2 billion (1996 figures from Irish Insurance Federation). The market is dominated by Irish Life with a 24 per cent share, and Lifetime/New Ireland, the Bank of Ireland-owned operation which will have a 17 per cent share when the takeover of New Ireland by Bank of Ireland is completed. There are a number of smaller companies with shares of 5 per cent or less. In a competitive market, cost control and economies of scale are seen as the keys to being able to offer attractively-priced products. Consolidation has been going on for some time. The takeover of New Ireland by Bank of Ireland and the arrival of General Accident Life in the Irish market are expected to accelerate this consolidation process. Brokers will be pleased to see a new broker-friendly insurer coming into the market, providing them with a new alternative for placing client business.
