October 29, 2018
Specialist insurance company PPS Mutual will distribute its second round of profit sharing to members after completing its second financial year of business in Australia.
The members of the mutual insurer will receive a profit assignment of 7 per cent of their total premiums paid during the year, plus a further 2 per cent of investment returns based on the opening balance of their Profit-Share Account.
This assignment follows the 8 per cent paid of PPS Mutual members for the 2016-2017 financial year (see: PPS Mutual Issues First Round of Profit Share), and is the first assignment to members that includes the payment of investment returns.
The profit assignments are drawn from a Profit-Share pool within the PPS Mutual Benefit Fund and made to the members individual Profit-Share Accounts each year but are not accessible unless a member has retained their policy for 10 years.
After that time, they gain partial access to the profit share funds and full access is granted after 20 years or upon reaching age 65, on death, being diagnosed with a terminal illness or on certain other events.
PPS Mutual Chief Executive, Michael Pillemer did not disclose the dollar amount of the profit share but said the assignment of a profit share for a second consecutive year reflects the viability of its mutual model.
“Given the current background of the Hayne Royal Commission and consumer dissatisfaction with traditional providers, we believe the mutual model can offer Australian professionals a radical reappraisal of how life insurance can work,” he said.
“Our philosophy is that when you purchase PPS Mutual insurance you’re not just a customer, you’re a member. This means you have a real stake in the business and the profits generated by the products,” Pillemer added.
He said PPS Mutual had accredited 200 non-aligned advisers across Australia since launching in 2016, and had added around 70 advisers to those accredited in the past year.
At the same time, the numbers of mutual members had grown by 70 per cent over the past year, according to Pillemer, who added that half of its policies are taken out on a level premium basis, compared with the industry average of 11 per cent, reflecting the long-term proposition of the life insurer.