A recent round of premium rate changes released by PPS Mutual, which include both increases and decreases, has received praise from advisers for the nature in which the changes are to be implemented.
Stemming from its May 2021 pricing review, in what the specialist insurance company refers to as a re-balancing of its product portfolio, PPS Mutual has raised base stepped premium rates for its IP and trauma insurance contracts and reduced rates across its life and TPD products.
The rationale behind the increases to IP and trauma rates, according to PPS Mutual CEO, Michael Pillemer, rests mostly with worsening claims experience across the industry (although he says this has not been PPS Mutual’s experience), and the global low interest rate environment and resultant reduction to profits.
The rate reductions made to its life and TPD products, on the other hand, reflect the company’s agenda to deliver a more competitive pricing proposition across these lump sum insurance offers.
Where the insurer has received strong endorsement from the adviser community relates to how it will be rolling out the adjustments.
For the IP and trauma insurance rate increases, PPS Mutual will be implementing a phased approach, in which the increases will be spread over a three-year period in order to minimise the impact on its existing policy holder members.
Meanwhile, the rate reductions for life and TPD are to be applied to all existing member policies as well as to new business cases.
According to Pillemer, the phasing-in of the IP and trauma increases and the passing back of the life and TPD rate reductions to existing members are both reflective of the mutual insurance model in which he says existing members matter more:
If we must favour one over another, we will favour our existing members
“One principle of mutuality is equity between members. If we must favour one over another, we will favour our existing members over new members,” said Pillemer.
The insurer has provided Riskinfo with examples of feedback from the adviser community regarding the nature of these pricing adjustments, which it says is representative of the view held by many of its accredited adviser force:
Glenn Kerr – Partner/Adviser of MBS Insurance based in Melbourne:
“Just wanted to congratulate you on the way you have tackled the increases …that are ravaging the insurance industry of late. Most insurers are taking a sledgehammer approach…
I can’t actually remember this ever being done before
It was refreshing to see that your approach was to spread your IP, Trauma increases over a 3 year period. However the surprising benefit for us was that the decreases for your Life & TPD rates were being passed back to existing clients. I can’t actually remember this ever being done before and I have been around a long time!”
Ian Satill – Director, Curo Financial Services based in Sydney:
“I have just had a client renewal that’s come through where the Life and TPD discounts have been passed back. I have to say that I am impressed and I haven’t often been impressed with Life Insurers of late.”
With its focus directed towards managing the quality of its entire insurance pool, Pillemer confirmed all PPS Mutual policy holder members will continue to be subject to the same premium rates structure. He added that if any rate increases subsequently emerge as being in excess to what was required, the mutual nature of the insurance company structure will ensure that its members will be the ultimate beneficiaries, by way of increased future profit share.
The phasing-in of the IP and trauma premium rate increases has been delayed and will commence from November 2021, while the life and TPD rate reductions are being passed back at policy anniversary for members commencing from 4 June 2021.