Insurance products group to shut down declining card protection business

CPP Group, a provider of assistance and insurance products, intends to pull out of its legacy UK and European Card Protection business, warning this “is in terminal decline and will soon become unprofitable.”

The listed Leeds-headquartered group has today published an outline of its Change Management Programme. (CMP)

It notes that while CPP India, CPP Turkey and Globiva are operating successfully, the UK and European Card Protection business has been in decline since 2012 and threatens to become a significant drain on group resources.

CPP states: “Our intention is through the CMP to withdraw from these products and markets.

“Withdrawal from the Legacy Business will be a long and complex process, one with many regulatory and operational inter-dependencies.  

“The business has not prepared itself for the inevitable. The terminal decline of the Legacy Business is an established fact and one well understood, though never addressed.

“Consequently, the Group is now, belatedly, implementing a Change Management Programme, one which should have been implemented several years ago, to efficiently manage the exit from our Legacy Business.”

The group explains its overarching strategy is to migrate CPP to an InsurTech business led by its group company, Blink, and supported by CPP India and CPP Turkey. Blink is the group’s InsurTech platform servicing the global travel sector.

CPP says InsurTech businesses generally have attractive economics, generate high levels of repeat business, operate with high margins and are usually valued more highly than their traditional insurance counterparts.

It adds: “The strategy, if executed correctly, will simplify the business and its operations and, moreover, will set out a clear purpose for the group.

“While this is a relatively simple strategy, simple does not equate to easy. The strategy will take three years to fully implement.”

CPP acknowledges Blink is currently at an early stage of development. It says the company will need a programme of activity to ensure its operational processes are robust enough to handle a much larger volume of transactions.

And setting out the risks involved with the changes, CPP warns the complexity and duration of its plans may result in cost over runs.

It states: “As we build out the IT Platform for CPP India and migrate from the legacy systems, the group will have a period of dual running costs for both platforms.

“We expect to suffer these dual running costs until the first quarter of 2025, after which we should be able to realise material cost savings.

“Costs associated with the CMP will be substantial, as will the redundancy and retention packages which we will need to introduce.”