The broad range of products offered by PPS Insurance was enhanced in the year, with a number of innovative and significant improvements to the core Sickness and Permanent Incapacity offerings. The discipline of ongoing development and introduction of new and improved products and services to PPS members benefit PPS through increased sales, share of market and better retention of existing business.
By offering members more flexibility in earnings cover, premiums, waiting periods before claims are paid and optional benefits (for example benefits if family members are hospitalised), risk sales have increased by 16% year on year in an industry where risk sales have stagnated. Some of the product enhancements have been specifically aimed at attracting corporate professionals to PPS, expanding on PPS’ traditional self-employed market for Sickness benefits. PPS’ widespread presence and engagement on universities, with products tailored for the student market, is helping ensure a healthy inflow of future professional clients for PPS.
PPS’ Sickness and Permanent Incapacity products remain the cornerstone of PPS’ offerings, introduced at the inception of PPS 75 years ago. The addition of an extensive range of mortality and morbidity benefits have helped ensure continued growth in the past ten years.
PPS Life Advisory had a very successful year, and now has some 235 tied agents working exclusively for PPS. There is a continued focus on vesting of agents and productivity, which is benefiting PPS through growth in market presence and scale, breadth and sustainability of the division.
PPS Life Broker Services enjoyed a very successful year, buoyed by increased support from PPS’ long standing and loyal independent advisers and by continued innovation of products and services to this market.
Total gross life premiums of R3,2 billion (up 12% from prior year) have been received, supported by a 39% growth in members.
The total number of policies in force increased healthily in 2015 to 249 790 (up from 238 000), and PPS continues to enjoy exceptionally low lapse rates, and high average sums assured on written business.
The business experienced an increase in claims during the year. A total of R1,3 billion claims (up from R1 billion in the prior year) have been paid, and R799,8 million was paid in sickness and death claims. The increase in claims remains within pricing assumptions, and the variability in claims is not entirely unexpected given the difficult economic environment and normal volatility of insurance claims.
Almost 20 000 sickness claims, at an average of R35 000, were paid in 2015.
The business achieved pleasing growth in members and policies in a difficult market where growth has stagnated. Management expects continued healthy growth in policies, premiums and market share because of the significant investments in recent years distribution depth and breadth, and continued product innovation.
Compliance with a wave of new regulations in the financial services sector (SAM, TCF and RDR in particular) has significantly increased the cost base of the business, which is impacting on sustainable profits for members. Further, the regulatory impact has been negative on the effective servicing and on delivery of new products and strategies in support of the growth of the business.
Many commentators believe that 2015 was a watershed year for emerging markets and South Africa in particular. Our currency is at all-time lows and economic growth continues to be insufficient to create jobs.
However, professionals continue to be in high demand as a vibrant professional sector is essential for economic growth. As the Society enters its 75th year, PPS will continue to serve its members by providing world class financial services covering needs from graduation to retirement.
|THE PPS GROUP||KEY INDICATORS||2015||FIVE YEAR REVIEW|
|SICKNESS AND LIFE INSURANCE||Total assets*||R29.5 billion|
|PPS Insurance Company provides long term life, sickness, dread disease and disability insurance to eligible members. In terms of the mutual model, all the profits are ultimately attributable to our members.||Gross premium revenue||R3.2 billion|
|New annual premium income||R518.3 million|
*Excluding assets in unit trusts for third parties