The insurance industry pays out £8.4m every day in individual life, critical illness and income protection insurance claims
The ABI published figures today which it says highlight the vital role insurance plays in helping customers cope with the financial difficulties that can arise as a result of a death, serious illness or injury. In 2013, £3.1 billion1 was paid to 99,000 customers or families, which equates to 270 families a day benefiting from protection policies.
Helen White, the ABI’s Head of Protection, said: “The insurance industry pays out £8.4m every day in individual life, critical illness and income protection insurance claims, making a real difference to people’s lives at some of the most difficult of times with 97% of all claims paid in 2013. At the most stressful times, insurers want to make it as simple and easy as possible for people to claim.
“Industry initiatives such as the ABI’s Code of Practice on non-disclosure have led to a fall in the percentage of claims declined from 8% in 2007, as customers have become much more aware of which information they need to share with their insurer. It is encouraging to see this has resulted in a continuing fall in the percentage of claims that are declined; insurers are committed to helping consumers make informed decisions about which protection insurance product is right for them and how to avoid having a claim declined.”
The latest data published by the ABI shows that in 2013:
The average claim paid in 2013 for individual income protection (IP) policies was £11,500 paying out on average for 230 weeks (more than four years), to help those unable to work. (See Notes to Editors for details on group income protection claims).
The average pay-out on a term life insurance policy was £51,500 with 98.4% of claims being paid. Total claim payments were £1.3 billion.
For whole life insurance the average claim payment was £10,300 with 99.9% of claims paid. In total £449 million was paid out
The average pay-out on a critical illness (CI) insurance policy was £60,400. The percentage of CI insurance claims being paid continues to rise, with 91.8% paid (up from 80% in 2005). There has been a steady rise in the percentage of claims paid since the introduction of the ABI’s Code of Practice on non-disclosure, first issued in 2008, which clarified which medical information customers needed to share with insurers.
Total Permanent Disability claims averaged £66,700 with 62.2% of claims paid, up from 50% in 2009 . Before the ABI introduced the standard definition for Total Permanent Disability (TPD) in the Critical Illness Statement of Best Practice in 2011 there was no standard definition of what circumstances qualified as “total permanent disability”. This lack of clarity lead to claims being made that did not qualify. The introduction of the Statement of Best Practise has meant that the share of declined claims has steadily fallen; this trend will continue as all new TPD policies are tested against the industry standard set by the ABI.
|Type of Product||Number of Claims|
|Received||Paid||% Paid||% Declined||Average Claim Paid in (£s)|
|Total Permanent Disability||669||416||62.2%||37.8%||66,700|
|Whole of Life||43,529||43,491||99.9%||0.1%||10,300|
|Individual Income Protection1||13,170||12,004||91.1%||8.9%||11,500|
Note: Claims paid includes those that were in payment at the start of the year and new claims where a decision was made during the year. Group protection claims are excluded