AIG publishes its life insurance claims, but why are they so low compared to the rest of the industry
The life insurance payout statistics in the UK, average around 98.5 per cent with most insurers paying around 99-100 per cent of claims. When AIG published their latest life insurance figures of 92.2 per cent, immediately this raised concerns as to why they were so low.
When you consider that during 2013, the insurer paid 7.8 per cent less claims meaning that less than 90 per cent of claims were paid it clearly shows an anomaly. At first I thought it was a misprint, so I contacted AIG to check their figures.
Steve Casey, head of marketing and propositions at AIG Life, said ‘the reasons for the low payout figures is due to the number of life claims they handled.’
Before you start to think that AIG should be a company to avoid because they don’t pay out on life claims it is worth noting that the way claim stats are published don’t help in every situation. For example, one insurer has 3,000 life claims and only refuses 10, whilst another only has 10 claims which result in 1 claim being refused.
Speaking to Mr Casey it is clear that the anomaly in their claim stats are down to the low number of claims. As the insurer is still growing their protection business AIG expects as the number of claims increase over the coming years it will see higher payout figures.
The ABI supported this stance by saying: ‘there will obviously be differences between established market providers, some of whom have offered protection products for 100 years, and new entrants to the market.
‘New entrants with fewer customers can have disproportionately high decline rates, because a small number of claims represent a much bigger percentage of a small number of customers than a large number of customers.
‘These statistics are intended as a guide to the whole market and each provider will usually publish their own statistics to highlight their company’s specific claims rates.’
Mr Casey concluded: ‘the figures are in keeping with the size and maturity of AIG’s portfolio. The percentage paid figures are higher than last year, which we predicted would be the case and these will increase as the insurers portfolio increases.’