PPS Mutual Announces Profit Share for Sixth Consecutive Year

PPS Mutual’s profit-share arrangement has seen it share pre-tax profits of 5% of premiums with its members for the 2021-22financial year.

The company says this equates to a post-tax 3.5% profit share rate and that it has also assigned a further 1.75% of opening profit share balances (net of tax).

It says the total profit-share assignment for the year is $1.6 million, noting that this is the sixth consecutive year that PPS Mutual has shared profits with its professional members and that the Profit-Share Pool has grown to $5.9m.

The company states that since the launch of its Professionals Choice product in 2016, it has boosted the profit it assigns to members from $500,000 in 2017-18 and that the Profit-Share Pool has more than doubled over the last two years.

PPS Mutual says the profit share is unique, adding that it is the only retail life insurance company in Australia to share profits with its members.
Insurance premiums are pooled and used to pay out claims, cover the costs of the business and provide capital reserves for future claims. Any surplus money is deemed profit and all PPS Mutual members are entitled to a share. Assignment rates vary each year and members are entitled to share profits even if they make a claim.

PPS Mutual Chief Executive Michael Pillemer says the 3.5% profits reflects the robust performance of its life insurance business in Australia.
“This is the sixth consecutive year we have declared a healthy profit and shared profits with every professional we insure in Australia.”

He reiterates that PPS Mutual is the only life insurance company in Australia to share its profits, “…which keeps clients happy.
Importantly, PPS Mutual has continued to maintain a high client retention rate, and feedback from advisers is also strongly supportive of this additional benefit.”
Pillemer says that profit sharing and the mutual model leads to high customer satisfaction and loyalty.
He cited PPS Mutual’s lapse rate of 2% compared to the life insurance industry rate of 13.4% (referencing the NMG Risk Distribution Monitor for 12 months to June 2022). The lapse rate measures the percentage of an insurance company’s policies that have not been renewed.

Pillemer says the firm’s profit-share arrangement is helping it retain its clients “…once members join PPS Mutual, they very rarely leave. We are proud to sustain the industry’s lowest lapse rate, which is one of our key points of difference with other life insurers.”

The 2021-22 result follows a profit share of 6% for the 2020-21 financial year plus 2.75% of opening balances. The company adds that the its life insurance policies are available only through independent financial advisers and product eligibility is bounded to 24 defined professional occupations. As only specific professionals are targeted, the cover is tailored towards their specific needs.

It states that PPS Mutual Members are required to retain their policies for 10 years to gain partial access to their profit-share funds. Members can take up to 5% of the balance of their Profit-Share account each year. Full access is granted after 20 years or when members reach age 65, and on death, terminal illness, and certain other events.