The 2016 financial year was a tough year for the insurance industry from both a subdued economy with pressure on take home pay, as well as catastrophes such as floods, fire and hail. This resulted in an inverse correlation of an increase in claims and downward pressure on premiums.
For PPS Short-Term Insurance, the year presented numerous challenges due to a delay in the granting of an insurance licence and other regulatory processes, as well as unexpected delays in the implementation of systems. The business got going in March, and has met its business plan for the first year of operation on its gross written premiums and maintained the claims/loss ratio within target.
In the year under review the business model changed completely, with PPS Short-Term Insurance now operating as an insurance company and not a broker. The professional skills in actuarial, insurance technicians and financial people were bolstered by growth of almost 50% in the staff complement.
In order to increase business flow and to attract new policyholders, distribution was opened to the wider short-term broker market.
To the initial offering of personal lines insurance, business insurance was added in mid-December, with a major marketing drive launched early in 2017. Other products to be rolled out in 2017 include professional indemnity and a value-added product bundle that will include cover for paint and dents, credit shortfall and credit life.
The fully-fledged insurance company benefited from the partnership with Santam. As an established insurer, Santam assisted with laying the foundation in providing access to its rating methodology, as well as underwriting procedures and product development. Subsequent to the launch of PPS Short-Term Insurance, Santam is managing its claims on an outsourced basis.
The launch of the commercial offering will form the core of the thrust in 2017.
It is expected that the economy will remain subdued until 2018. The insurance cycle is expected to bottom out towards 2018, with a period of renewed growth in the sector in 2019.
PPS Short-Term Insurance is currently in the establishment stage and it will take a few years to attain the critical mass and required profitability to add to the PPS Profit-Share Accounts through its dividends that will accrue to PPS Insurance Company Limited.
|MOTOR AND HOUSEHOLD INSURANCE|
|PPS Short-Term Insurance offers PPS members the opportunity to obtain short-term insurance at exclusive rates, in partnership with a leading underwriter in the South African market. (Established 2016)|