Youi will end its partnership with Blue Zebra after completing a strategic review of its products sold through intermediaries, but the agency says it is close to securing a new underwriter.

The Queensland-based insurer’s South African parent, Outsurance Group, says it will stop underwriting new business through the agency’s platform from July 1. The in-force book will then go into run-off for a year. 

“Shareholders are advised that this strategic review has been completed with a decision to exit the [managing general agent] arrangement and therefore the broker distribution channel,” Outsurance said last night.

“Youi’s exit allows [Blue Zebra] to obtain new underwriting partners to position the company for the future.”

Outsurance announced the review last month, saying it was “prompted by a desire to focus more attention and capital on Youi’s core direct distribution channel, which offers much-needed competition in the Australian market”.

Youi holds a 36.9% interest in Blue Zebra and is negotiating disposal of the stake with other shareholders, Outsurance says.

Blue Zebra says it is in “advanced” negotiations with new underwriting partners and will look to “further accelerate” product development.

MD Colin Fagen says the agency’s shareholders are looking to buy Youi’s stake.

“With Youi exiting, it gives us the independence to negotiate our capacity for either our full product range or specific product lines and align with underwriters that share the same focus and passion for servicing the intermediated distribution channel,” he said. 

"This is an exciting stage in the evolution of [Blue Zebra]. We will be announcing further details shortly and want to assure our broking partners that it is business as usual ... during this transition.”

Youi mostly sells personal lines cover direct to consumers. It started underwriting Blue Zebra’s personal lines and commercial products under a five-year agreement in March 2020.

Outsurance has also provided an update on Youi’s claims exposure to Ex-Tropical Cyclone Alfred.

Most of its losses fall within the cyclone reinsurance pool’s claims window, which provides cover until 48 hours after a system is downgraded. 

“It is estimated that Youi’s exposure to residual losses, outside of this claims window and therefore its overall net loss from the event, will be ... $10 million to $15 million,” Outsurance said.