The PPS Mutual-designed Professionals Earnings Index comprises independent data, against which PPS Mutual benchmarks its life insurance benefits annually.

“We can see an increase in the PPS Mutual Professionals Earnings Index of 3.9% per annum, reflecting an increase in real professional earnings over the two years between 2014 and 2016. This compares with Consumer Price Index (CPI) increases of 1.3% per annum over the same period,” said Michael Pillemer, chief executive of PPS Mutual.

“As a result, indexation for all our Members will be 3.9% per annum over the next year across all our risk insurance products.”

PPS Mutual is Australia’s only retail life risk insurance offering exclusively for select professionals, including accountants, doctors, dentists, lawyers, and engineers. PPS Mutual has developed products such as Income Protection, Life, Total and Permanent Disability, and Trauma insurances tailored to the needs of professionals.

“We offer life insurance products just to professionals. We can therefore index members’ policy benefits to earnings growth solely for the occupations we cover (or inflation if that was to be higher in any year).”

“This sets us apart from other insurers who generally index their cover benefits to the CPI. We believe our approach better meets the needs of professionals and given that professional earnings have historically increased at a far greater rate than inflation, we are generally indexing Members’ benefits at a higher rate,” said Pillemer.

The PPS Mutual Professionals Earnings Index uses earnings growth for the different occupations it covers, as determined by the Australian Bureau of Statistics. For the two years between 2012 and 2014, the PPS Mutual Professionals Earnings Index rose 3.8% compared to a 2.4% rise in the CPI.

PPS Mutual is owned by its members and founded on the ethos of mutuality where members share in the profits of the insurance that they buy.

Any profits earned by mutuals are distributed back to its members. This structure, rather than shareholder ownership, encourages mutuals to make ethical decisions that deliver long-term benefits to its members,” said Pillemer.

“Mutual insurers have a better alignment of interests between customers and insurers than companies that are shareholder owned, which are motivated by the desire to maximise profits, which creates a misalignment between shareholders’ and customers’ interests,” Pillemer said.

“PPS Mutual is based on the proven PPS business model that has been successful in South Africa for over 75 years. In the past 10 years, it has allocated $2.2 billion in profit share to its Members. In contrast, for most life insurance companies, these profits would be enjoyed only by shareholders.”

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