Specialist life insurer PPS Mutual has announced that its Profit-Share pool for the 2023-24 financial year has exceeded $10.7 million, marking the eighth consecutive year of returns to members. The unique mutual model allows each member to share in the company’s profits, which totalled $3.07 million for this financial year, according to a news release.
Since its launch in 2016, PPS Mutual’s Profit-Share arrangement has expanded steadily, quadrupling over the last four years from $2.4 million in 2019-20 to $10.7 million in 2023-24.
PPS Mutual stands alone in the Australian life insurance market with a profit-share system. In this structure, premiums are pooled to cover claims, operational expenses, and capital reserves. Any surplus is categorised as profit, which is then distributed to members. This year’s allocation shows an assignment rate of 3.5% on premiums, based on a pre-tax profit margin of 5%.
Michael Pillemer, chief executive of PPS Mutual, said the Profit-Share model demonstrates the company’s commitment to serving its members. “We are proud to surpass $10 million in our Profit-Share pool, a testament to the value we bring to the hardworking professionals we serve in Australia,” he said. “Our members continue to see growth in their Profit-Share accounts—one has even accrued over $40,000—highlighting the strength of our mutual business model.”
Pillemer said the profit-sharing arrangement also benefits advisers in PPS Mutual’s network. He said that one advisory firm has accumulated more than $1 million in Profit-Share assignments for its clients, and an individual adviser has facilitated over $700,000 in Profit-Share balances.
Pillemer attributed PPS Mutual’s industry-low lapse rate to its commitment to member-focused financial outcomes. The company’s lapse rate – indicating the number of policyholders who do not renew their policies – remains at 4.9%, compared to an industry average of 15.3%. PPS Mutual also increased its market share from 4% to 5% by June 2024 and achieved a compound annual growth rate (CAGR) of 34.5% in premium income since 2021.
“Our guiding principle is to align our business strategies with the interests of our members,” Pillemer said. “Being recognised as the [Adviser Ratings] Best Retail Insurer of the Year for the second consecutive year validates this approach and reflects the strong relationships we've built with
our members.”
PPS Mutual’s life insurance policies are available exclusively through independent financial advisers. Members gain partial access to their Profit-Share accounts after 10 years of membership, with full access granted after 20 years or upon reaching age 65, terminal illness, death, or in certain other circumstances.
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