Opt-out shift dents travel insurer Cover-More’s NZ gross sales

Opt-out shift dents travel insurer Cover-More’s NZ gross sales | Insurance Business

Opt-out shift dents travel insurer Cover-More’s NZ gross sales
Cover-More Group has reported a 4.6% decline in gross sales in NZ since Air New Zealand can no longer use the opt-out option for travel insurance on its flight bookings.

The specialist travel insurance, medical assistance and employee assistance provider felt the knock-on effects in their Half Year results for 2016 of the Commerce Commission’s tough stance on Air New Zealand customers automatically buying travel insurance unless they opted out.

However, the company said continued success in digital channels with other partners, with some seeing more than a 20% increase, helped to offset it.

It had also commenced a new distribution partnership with Westpac NZ in December – its first banking partner - and was developing product distribution through a mobile app.

It was hoped that this, plus partnerships with Mosaic to launch Volo travel insurance targeting Gen Y travellers and a P&O Cruises NZ relationship, would help enhance profit outcomes.

The Group also announced EBITDA at AU$20.4 million, 16.4% behind pcp of AU$24.4 million.

The company put this decline down to several factors, including increased underwriting premium payable due to higher claims costs; one-off costs of AU$1 million associated with the settlement of a legal dispute and the impacts of the Bali ash cloud; investment of AU$0.6 million incurred in expanding Cover-More’s international footprint; and a decline in the medical assistance business of AU$0.6 million due to lost contracts as reported in FY2015.

Group CEO Peter Edwards said: “We continue to work with our Australian underwriting partner in an effort to limit the volatility experienced through the current underwriting premium model with an aim to transition to a Generalised Linear Model.

“We anticipate that the issue will be resolved in H2 FY2016.”

Edwards also underlined the positives to be found in the company’s revenue growth in the travel insurance business.

“Our first half has delivered strong revenue growth and market outperformance in the travel insurance business.

“Our Australian business achieved growth of +7.1% - an acceleration of the growth we saw in the FY2015 year.”

He added: “Our international business momentum is continuing with EBITDA in Asia up +75.0% and significant global growth initiatives on track including North America and Global Direct.”