A travel insurance fight could be brewing across the Tasman, but which side should you back?
Health insurer NIB Holdings Limited (ASX: NHF) has laid down the gauntlet by announcing today it's entering the cut-throat travel insurance market in New Zealand, leveraging its growing brand presence and taking on fellow ASX-listed insurer Cover-More Group Ltd (ASX: CVO)
NIB will partner with global travel insurance provider World Nomads Group (WNG) and will be going up against a swarm of existing providers including not-for-profit Southern Cross Travel Insurance and the fast growing Cover-More Group.
According to statistics held by the Insurance Council of NZ, travel insurance falls into a category which includes livestock insurance, and was worth $305 million in gross written premiums in 2013. In the same year not-for-profit company Southern Cross claimed over 50% market share.
But Cover-More has been rapidly advancing in the market, forming ties with Flight Centre Travel Group Ltd (ASX: FLT) and claiming its place as New Zealand's "pre-dominant" travel insurance provider. Earlier this year Cover-More also scored a valuable agreement with Insurance Australia Group Ltd (ASX: IAG) for distribution through its New Zealand insurance brands.
NIB will certainly have a fight on its hands, using a commodity product against the superior brand recognition of Southern Cross, and the distribution might of Cover-More.
In this fight I would bet my money on Cover-More. NIB is a strong performer in the health insurance business, but Cover-More has been achieving faster growth at a company level, growing earnings per share by 20.7% in the first half of the 2015 financial year, compared to NIB's 4.4%.
