South African insurer Youi officially launches in NZ targeting the IAG dominated car, home and contents insurance markets

South African insurer Youi officially launches in NZ targeting the IAG dominated car, home and contents insurance markets

New Zealand's car, home and contents insurance market, of which Insurance Australia Group (IAG) has about 66% marketshare, presents new "challenger brand" Youi with an opportunity to show consumers there's a compelling alternative, says Youi's CEO.

The South African owned insurer announced its New Zealand launch today, having received a licence from insurance regulator the Reserve Bank. Youi says it's investing "close to $60 million" in capital, and will have 420 New Zealand-based staff by next April.

Youi is entering a market where IAG, fresh from its takeover of Lumley, has about 50.5% of the overall New Zealand insurance market, around 66% of the home and contents and vehicle insurance market, and 40% of the intermediated (sold through brokers) insurance market. IAG operates the AMI, State, NZI, Lumley and of course IAG businesses.

Commerce Commission chairman Mark Berry told interest.co.nz last month that when considering IAG's application to takeover Lumley, the Commission had concluded new entry to the New Zealand insurance market would be difficult. Berry said the need to set up and establish a network, get a new brand accepted by the public, and going through "all the regulatory hurdles," would take time.

Against this backdrop Youi NZ CEO Daniel Matthee told interest.co.nz it's important to understand Youi sees itself as a challenger brand, and it already competes with IAG in Australia.

"I think our offering is based around the fact that we ask more questions of our customers, we understand their insurance needs better, how they use and don't use their cars, what features and factors are important around their insurance needs, and then we tailor make policies and a quote that is suited to an individual's needs," Matthee said.

"We plan to communicate that via online marketing campaigns and above the line television campaigns as well as through word of mouth."

"Being in a market which is quite consolidated we think actually presents us with an opportunity to show the consumer that there's a compelling alternative to the options they have right now," Matthee added. "We're committed to this market (and) not for the short-term. We're in this for the long haul.  We certainly intend to be here for a very, very long time."

"We fully understand that we're the challenger. There's a much larger player in this market that we are conscious of. But we also think it's a sophisticated player and there won't be irrational behaviour," said Matthee.

'Three to four years for sustainable, profitable business'

As it launches Youi is promoting the "Youi Wall" on its website. It says anyone can share their experiences here, giving current and potential customers insight into whether they're making the right decision about their insurance provider.

Matthee said the $60 million of capital would be sufficient to service Youi's business needs even if it outperforms management's best estimates "by some margin."

"Our  first objective is to build a sustainable business which is profitable. We expect that we should be able to do that within a three to four year window," said Matthee.

"We don't have an overall marketshare goal that we're striving to achieve. I think we're new, we're going to go about it in a very prudent and measured fashion, (and) we need to build sufficient scale so that we can have a sustainable business. But we won't do irrational things to get marketshare," he added.

With a direct to consumer business model Youi plans to underwrite each client individually so isn't looking to become an insurance underwriter to the likes of banks, Matthee said.

'Sound risk-adjusted capitalisation & prudent business plan'

AM Best, an international credit rating agency focusing on the insurance industry, said it has assigned a financial strength rating of B++ (Good) and an issuer credit rating of "bbb" to Youi NZ, with the outlook assigned to both ratings stable.

"Youi NZ is a newly formed company licensed as a non-life insurer in New Zealand. The company is wholly owned by Youi Holdings Pty Ltd (Australia), which in turn is controlled by OUTsurance Holdings Limited (South Africa). The ultimate parent is Rand Merchant Insurance Holdings Limited (South Africa)," AM Best said.

The credit rating agency said Youi NZ's ratings are based on its sound risk-adjusted capitalisation and a prudent business plan.

"The company’s net premium-to-surplus ratio is anticipated to remain under 0.4 times throughout its first five years of operation. In addition, the assumptions used in the company’s business plan are based primarily on the group’s actual startup experience in Australia."

"Partially offsetting these positive rating factors are Youi NZ’s lack of operating history in the New Zealand market and the challenges in executing its business plan amid heavy competition from established insurers within the region. Factors that may trigger negative rating actions include a material adverse deviation of its risk-adjusted capital relative to its business plan due to a failure to meet its planned underwriting and investment performance," said AM Best.

Youi said it set up offices in South Africa and New Zealand a year ago to service Australian customers in a "follow the sun" operation, meaning it could help customers on a near 24 hour basis. It said New Zealand based staff total  about 280 employees, which will rise to 420 by April 2015.

 “We’ll be working hard to ensure that Kiwis get a great deal with us and we’re totally committed to the market, investing close to $60 million in capital.  Having call centres in three countries has assisted us with strong growth in the Australian market due to extended operating hours and increased customer satisfaction.  This has provided us with a lot of confidence that we can offer New Zealanders the same service offering," said Matthee.

Here's Youi's background information: 

.        OUTsurance first launched in South Africa in 1998. Fast-forward 16 years and OUTsurance is now the largest direct insurer in South Africa, with a workforce of more than 2,600 people

.       Youi, a wholly owned subsidiary of OUTsurance Holdings, launched in Australia in 2008 with a handful of employees, and has since grown to over 1,300 employees - and still counting.

.       Youi is the fastest growing car and home insurer in Australia and in a short period of time has become the fourth largest car insurer.  Youi customers in Australia could fill Eden Park five times, with over 700,000 policies active with Youi.

·         Youi’s New Zealand offices were originally opened to service the Australian business, with a longer term strategy to enter the New Zealand market.

·         Youi New Zealand was granted an official license to operate in New Zealand for New Zealand customers on 28 July 2014.

·         Youi’s team is very important to their success, so employing the right people is paramount for the business.  Youi lives by the mantra to ‘hire character and train skills’.  That means they’ve done away with the cookie cutter approach.  They simply employ the right person for the job.

·         Youi’s international expansion plans have been referred to as the ‘chasing the sun’ approach to staffing.   Youi has call centres in New Zealand, South Africa and Australia so that when a client calls, Youi has a staff member to answer the call as part of their working day with no late night shifts impacting staff ensuring its clients always gets the best service available.

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7 Comments

Went to get a quote for car insurance from their website.
 
Found initial form requiring all personal details to be entered before anything about the car.
 
Gave up, will stay with State.
 
So much for 'social' warm fuzzies and transparency.

Does it matter which way around they ask for details they need? From what I gather they did it that way so they can use your name to address you for the rest of the quote.
IF you are worried about giving out info just use someone else’s address etc

Ummn they want phone number and all sorts of crap. No it's cos they want to be able to follow up with cold calls etc. Presumably the quote would be invalid if you gave false details. AMI and State give you the quote with no nonsense.

Here's a comment I received from a reader via email;
Hi Gareth

 

On the strength of your article, I thought I'd try and prise a quote out of these clowns.

 

The website is just a way to get you on the phone - they are not set up to quote online, even though all the questions they ask could easily be done via the website (for quoting purposes).

 

And so the phone interrogation begins. They seem to have a curious obsession with security locks and catches on windows and security screens on doors - perhaps a legacy of their South African heritage?

 

Finally, 30 minutes later, the house and contents quote comes down the line from wherever in Oz they are based (For purposes of comparison, my current insurer, AA, charges around $1400 per year including 10% fee for monthly payments), and Youi wants $434 per month!

 

A tirade of abuse is unleashed at the hapless Youi salesman for the theft of 30 minutes of my time (I ask to make sure it's not being quoted in Rand).

 

Their website sucks.

Their interrogation sucks.

Their pricing sucks.

 

I tried to leave feedback on the "wall" of their website. won't accept it as my cellphone number is too short (!)

 

Clearly they have just cut and pasted their Oz business to NZ with no understanding of the differences between the two markets.

 

go to australia google site; google.com.au then type youi insurance review

Out of 236 car insurance reviews in Australia , 38 customers rated Youi as excellent ...
 
... 132 rated it as terrible !

Quite interesting to read the comments – seems a bit xenophobic  and prejudiced  - (Gareth’s friend)  this company has done well in Australia and runs a lean and mean organization – savings that are passed onto the policy holders – how much is IAG and NZI paying brokers (your money).  I do not think Youi uses brokers – I stand to be corrected.
All insurance companies’ record telephone conversations – the more details that are captured the better when it comes to claim time – so be aware of this for all insurance companies.
As New Zealanders we should embrace change and competition, as this ensures that we get the best for the consumer – and not for the fat cats. It is quite interesting to see the number of jobs that Youi have created in Australia and the amount of job vacancies there are advertised or New Zealand.  I feel that Vero (AA) , Tower, and Youi will be beneficial for the New Zealand consumer
I am sure that Youi handle all there call centre calls and that they are not out sourced