New blow for motorists as insurer pulls out of market
The crisis-hit motor insurance market has suffered a new blow after an insurance company said it would stop writing new business here.
Zenith Insurance, the largest Gibraltar-based motor insurer in Ireland, has decided to pull out of the motor market over soaring claims costs and losses for insurers.
Across the market premiums have shot up by 70pc in the past three years, and are up almost 40pc in the past 12 months.
One of the agents used by Zenith, Galway-based Bump Insurance, confirmed Zenith was pulling out of the market.
"We wish to advise that Zenith Insurance plc, part of the Markerstudy Group, has decided to cease writing motor business in Ireland through all of its Irish managing general agents.
"In respect of Bump Insurance, this means that no more policies will be written by us on behalf of this particular insurer from February 2017 onwards."
The notice posted by Bump on behalf of Zenith blames an increasing regulatory burden and the uncertain legislative environment for the decision by Zenith to get out of the market. It also blamed what it called "a lack of engagement with us by Irish industry bodies".
Zenith is thought to have built up a 5pc market share here through agents such as Bump, Footprint Underwriting and Prestige Underwriting Services.
Zenith used these underwriting agencies. They operate between brokers and insurance companies, with the insurance company ultimately taking the risk for policies.
Zenith is understood to have written around €50m worth of premiums here.
Broker Jonathan Hehir of CoverInAClick.ie said Zenith would close to new business in February.
But it will remain open for new business between now and then.
"For those unfamiliar with the motor insurance market, it's hard to understand a provider leaving a market where the prices and potential margins have doubled in many cases.
"We believe that the Setanta decision, which makes each insurer liable for the debts of their competitors, was a big factor in Zenith's decision to exit the market."
Zenith group underwriting director Gary Humphreys said in a statement: "We continually monitor performance and rates in all areas of our business and respond accordingly. We are not completely withdrawing from the Irish market."
It is understood it will retain a small motorbike insurance business here.
It is less than two months since another Gibraltar-based company, Enterprise Insurance, collapsed, leaving 14,000 drivers scrambling to get alternative cover.