The UK’s special relationship is often cited as being with the US, but there is an insurance market much closer to home that has been neglected in recent years – and that is with the Republic of Ireland (ROI). But things are changing with increased interest from both brokers and insurers.
The insurance market in the ROI has certainly been a challenging one that has been buffeted by a number of different headwinds.
The market has had to operate under an increasingly restrictive regulatory environment imposed by the Central Bank of Ireland. This strict regulatory regime was put in place in response to the 2008 financial crash, a number of significant market failures, including that of Quinn Insurance, along with issues such as problems at RSA Ireland over reserving failures.
The knock-on effect of this regulatory environment – combined with a spike in claims costs as a result of huge personal injury awards – stifled investment, drove insurance capacity away and created a stagnant insurance market, with customers facing limited choice and high insurance premiums.
But change is afoot. The personal injury claims landscape in Ireland is about to change following the introduction of new injury awards guidelines in April this year. These are part of a wider Government driven Action Plan for Insurance Reform aimed at reducing market volatility and bringing more certainty to customers and insurers.
This direction of travel also saw insurers Aviva, Allianz, AIG and FBD, along with broker AA Ireland, sign an agreement in August with the Competition and Consumer Protection Commission (CCPC) to boost compliance with competition law following a long investigation into “price signalling”. The aim, again, is to improve competition between the companies, which make up 70% of the market.
It is early days but there are already signs that the changes to the insurance market in the ROI is on the turn. Brokers for example, who have a naturally keen eye for new opportunities, have increased their interest in the country. Aston Lark, for example, invested heavily this year via its subsidiary Aston Lark Ireland, with six broking acquisitions, the latest being Dublin-based Brassington Insurance. And fellow consolidator PIB has also demonstrated its interest, acquiring retail broker, Creane & Creane and stating publicly that it plans to continue to expand in the country.
This has to be good news for the country’s insurance market. And while there is presently little evidence that traditionally more cautious and risk averse insurance capacity is rushing, it is highly likely that where brokers go insurers will follow.
The tide does seem to be turning, albeit slowly.
The MGAA, for its part, has also responded to the changing market dynamics in the ROI and has expanded its membership proposition to the country. The move to enable MGAs, insurers, and suppliers to join the association is designed to help MGAs in the country drive forward on standards, raise their profile with the regulator and attract new underwriting capacity. It also provides an opportunity for UK-based MGAA members to expand their knowledge of and contacts within the ROI. The biggest area for expansion would appear to be in the niche and specialist insurance area.
As a trade body we are very keen do our part to help the market create the conditions to attract inward investment and to that end the MGAA has been invited to speak at an Enterprise Ireland meeting this month (September) along with Leo Varadkar, the Minister for Enterprise, Trade and Employment.
It is clear that the special relationship between the UK and the ROI is back on the insurance market’s agenda. And while it is still early days, the direction of travel is clear and the ROI will become increasingly attractive to capacity providers, specialist underwriters, MGAs, and brokers, to the ultimate benefit of customers.