Profit-share pool exceeds $10m for PPS Mutual members

In its eighth consecutive year, PPS Mutual’s profit-share pool has surpassed $10.7 million for FY2023–24, $3.07 million of which has been allocated to its members. For this financial year, members were allocated 3.5 per cent of premiums, based on a pre-tax profit margin of 5 per cent.

Under this model, insurance premiums are pooled to cover claims, operational costs, and future capital reserves, and surplus is deemed profit of which all members are entitled to a share.

The insurer has reported significant growth in the pool over the last four years, having more than quadrupled since FY19–20, which saw just $2.4 million.

PPS also reported a lapse rate of 4.9 per cent, significantly lower than the industry average of 15.3 per cent, and a market share of 5 per cent as of June 2024, up from 4 per cent the previous year.

PPS Mutual chief executive Michael Pillemer attributed the firm’s “strong client retention and satisfaction to its unique profit-sharing model and mutual structure, which has also driven substantial growth across the business”.

Pillemer highlighted the mutual benefit for both members and advisers, with many across the board reaping considerable returns through this model.

“We are proud to surpass AU$10 million in our profit-share pool, a testament to the value we bring to the hardworking professionals we serve in Australia. 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.

“Profit sharing not only benefits our members but also supports our network of accredited advisers, who play a key role in delivering this value. This approach generates sustainable, higher-value business for advisers – one advisory firm has over $1 million in total profit-share assignments for their clients, while one adviser alone has over $700,000 in client profit-share balances.”

Pillemer said the model helps the firm better serve its members and their advisers.

“Our guiding principle is to align our business strategies with the interests of our members. The mutual model and profit-share arrangement means we take a long-term view of our member’s financial wellbeing and protection.” he said.

“It’s incredibly rewarding to see our members reaping the tangible benefits of our success, and we take great pride in serving them well.”