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Published 20 June 2012 21:58, Updated 20 June 2012 22:00
Foreign insurers are reporting big losses as a result of a catastrophic spate of natural disasters and the market dominance of insurance heavyweights, Suncorp and Insurance Australia Group.
Online domestic insurer, Youi, which is owned by South African conglomerate Rand Merchant Insurance Holdings Group, posted losses of $30 million for the 12 months to December 2012, according to the Australian Prudential Regulation Authority.
“They have had a huge advertising budget ... we have seen them everywhere, from billboards to TV ... but they have picked up hardly any business,” CLSA insurance analyst Jan van der Schalk says. “When economic times are hard, people buy more insurance but they tend to use insurers they know and trust, such as Suncorp or IAG.”
A greater uptake of insurance with “trusted brands”, along with increased claims and operating costs has lead Youi – with net premium income of $61 million and claims of $42 million for the period – to report large losses for the second consecutive year.
Youi is not alone in its struggle to break into the Australian market. Online insurer Budget, which is also South African owned, has felt the pinch as local insurers expand their market share.
“You only need to look at the premium growth [across personal lines of insurance] in Suncorp and NRMA to see this is happening,” van der Schalk says.