OUTsurance has applied for a short-term insurance license in Ireland, planning to enter that market in the first quarter of 2024.

This will be OUTsurance’s third market, with its biggest operation in SA, followed by Australia, which now generates 56% of OUTsurance’s gross written premiums and 39% of its normalised earnings.

OUTsurance CEO Marthinus Visser said the insurer, which has expanded its operations to life insurance and investments, had to think hard about its sustained long-term growth.

It could either join its peers and become a platform player that offers everything from insurance to banking or take its short-term insurance business to more markets. It chose the latter.

“We’ve decided that we need to stick to our knitting. This expansion to the Republic of Ireland is an extension of this process of seeking out markets where we can apply our core skills and therefore stick to our knitting,” said Visser.

The insurer won’t be launching life or investment products in Ireland. It will focus solely on short-term insurance as it has also done in its Australian business, Youi. Visser said the group believes its short-term operation still has a long runway, both locally and in new markets.

It studied Ireland for some time and chose it because of the healthy competition in short-term insurance there. Even with a market of 5.1 million people, OUTsurance believes this is big enough to move a dial in its diversification strategy.

Visser said OUTsurance’s products are predominantly aimed at the middle class. SA only has about 7 million people in that category, making its target market in Ireland almost as big as it is at home.

The direct insurance channel is well-established in Ireland, and that’s where OUTsurance’s core competitiveness lies. Private insurers provide bodily injury insurance there, whereas SA has the Road Accident Fund. The average premium in Ireland is also higher than in SA.

Furthermore, there’s well-established behaviour of shopping around for insurance, which has made many foreign insurance entrants thrive. Ireland’s economy is growing faster than SA’s, and the country has become an entry point for the UK to the European Union following Brexit. Also, being in the northern hemisphere, Ireland’s weather cycle is less correlated to SA and Australia.

“The largest competitor in Ireland has a larger motor book than OUTsurance South Africa,” said Visser. “We looked at all potential markets, and Ireland stood out, ticking all the boxes we deemed important,” he added.

But Visser said OUTsurance won’t be “betting the farm” on this new expansion. The size of its financial commitment will be contained well within the group’s appetite. The insurer is also prepared to play a long game. It won’t be starting price wars, writing unprofitable business. Its investment in Australian-based Youi took close to five years to get to consistent profitability. So, OUTsurance is prepared to exercise the same patience in Ireland.

“But the average premium in Ireland is a bit bigger, which provides you with a bit of help. You need fewer clients to reach break even,” said Visser.