Profiling the mind of a new leader

Izak Smit, CEO at PPS

Last year saw a changing of the guard at PPS as Mike Jackson retired as CEO.

This paved the way for a new leader who will bring new ideas and a fresh approach to the company. FAnews caught up with newly appointed CEO Izak Smit to discuss his appointment as well as other challenges the company faces.

Question: PPS has a unique model; how has this benefitted the company in the past? 

Answer: It is a fairly unique model as there are not that many mutual companies operating in the South African insurance industry anymore. By operating under the mutual business model, it means that the profits that PPS makes – which don’t get used to fund new business development – are returned to our members via their PPS Profit Share Account.

Over the past ten years, the accumulated profits that have been returned to members was in the region of R22 billion.

Question: Is the mutual model losing or gaining relevance in the current economic climate?

Answer: I believe that the mutual business model has relevance irrespective of the economic situation. Since the big financial crisis of 2007/2008, businesses operating under the mutual or cooperative business model have actually grown quicker than businesses operating under the shareholder model globally.

Question: Does regulatory changes keep you and your team awake at night?

Answer: The financial services industry by its very nature is heavily regulated; so anyone operating in financial services must simply make peace that this is a highly regulated industry and if they are not on top of regulatory changes, then they have a big problem.

Regulation should be a big focus area for any financial services company. It shouldn’t keep you awake at night if you plan accordingly and it should not simply be about ticking boxes but more about identifying where the regulator is coming from and then identifying the opportunities.

Question: How do you grow the business in tough economic times when insurance may be seen as a product which may need to be substituted if house hold balance sheets don’t balance? 

Answer: People sometimes do take chances and cancel their insurance when times are tough. We often see that during tough economic times that insurance doesn’t suffer as much as retirement savings. This is probably because people are quite worried about a catastrophe occurring and would rather start skipping payments towards retirement money.

Luckily at PPS we are still seeing good growth, even in tough economic times. The fact remains that underinsurance in the industry is so big there are plenty of people who need cover and make the right decision.

Question: PPS must do a lot of research into product relevancy. What makes a graduate professional tick?

Answer: Graduate professionals look for something a bit more special than the average person. Whether it is how they are contacted, the service or the advice they receive, they expect a premium offering and a premium brand.

Question: How do products aimed at graduate professionals evolve as lifestyles and responsibilities change?

Answer: Generally speaking, products are simpler and easier to get when you are young and that is why it is important to just start the right habits from a young age, like putting money away on a regular basis.

Once the clients have built up some assets or extended their families, they need to consider other products and how to manage their portfolio from a cash perspective because as assets build up, so too does the risk exposure. This just shows how important financial planning is.