PPS Short-Term Insurance About PPS Short-Term Insurance PPS Short-Term Insurance (personal and commercial) is unlike any other short-term insurance provider in South Africa. Firstly, we provide intelligent shortterm insurance for graduate professionals only, a benign risk pool. The solutions we provide, which include car, home and business cover, are carefully tailored to meet the client service needs of each member. Secondly, we operate under the ethos of mutuality, which means that all profits are returned to members with qualifying life products. This means that all premiums, after the costs of running the business, are eventually returned to members. The fair treatment of the whole pool of policyholders (claimants and non-claimants) is, therefore, the important consideration and not the protection of shareholder interests. Performance Despite having to face several significant challenges, PPS Short-Term Insurance had a successful year, delivering well above the business plan. This is largely due to a better-than-expected claims experience and good expense management. New business volume – although it showed good growth on the prior year – ended up falling short of our target as it continued to be impacted by the effect of the COVID-19 pandemic. The malicious cyberattack on the Group also had a significant impact on new business volumes during the year. The business initiated several key initiatives to increase new business volumes in the second half of 2021 (post the cyber recovery) and the results were positive with month-on-month increases in new business volumes to the highest levels in the past three years. The business had an exceptional claims year with the net loss ratio significantly better than target. In 2021, the net loss ratio was 55% compared to 51% in 2020. This was well below the 65% budgeted for. The business benefited from benign weather, especially during the summer-storm months. What also contributed to the good numbers were improvements in the claims operations in general. Risks, challenges and opportunities A notable challenge to the business in 2021 was the cyber event in March. The focus shifted to member service when systems were not functioning optimally. The team managed the recovery process extremely well, with minimal impact on our members. The business even experienced an increase in compliments during this time, despite the impact that the cyber incident had on operations. New business remained muted in the first half of the year due to the financial impact of the pandemic and the shift in focus to operations but did start to recover in September and October when we recorded our best months ever. Lapse rates were slightly higher than expected for the year, reflecting the strained economy. However, increased retention efforts are showing positive results. From a PPS Group perspective, a fair number of cancellations were due to emigration. The emigration of professionals is an ongoing risk for PPS as a whole, given the market segment in which we operate, and we are mitigating this risk with concentrated marketing to new graduates. This is being done to ensure that the overall pool of members remains stable in the short term and grows in the medium to long term. The second major challenge the business had to face during the year was the civil unrest in July, which saw a spike in claims. While all these claims were underwritten by the government insurer, SASRIA, we facilitated the submission of claims for our members and tracked the assessment and payout process. On a macro level, PPS Short-Term Insurance, like all other financial institutions, is exposed to ongoing political and socio-economic uncertainty and we have to take this into account in all aspects of our business. Climate change – which results in escalating frequency and severity of extreme weather-related events – is another risk that will affect the business more in future and needs to be considered carefully. A further risk – which has been exacerbated as a result of the lockdown – is the economic impact on our members’ ability to pay their insurance premiums. We are monitoring the situation and are constantly looking at different ways to support those affected in this way. Innovation We focused on enriching and adding value to the concierge services that we launched in 2021. These include: • Fine Protect, which takes the hassle out of paying traffic fines; • Licence Protect, which provides an easy way of renewing South African vehicle licensing discs; • Protect Me, which is a mobile panic button that members can activate anywhere if they feel threatened; and • ID Protect, which sends a notification to a member if there are any changes to their credit reports. PPS Integrated Report 2021 PPS Group performance at a glance | 68
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