A record £5 billion was paid to 153,700 policyholders in protection insurance claims during 2015
The Association of British Insurers (ABI) and Group Risk Development (GRiD) published last week, 9 June 2016, claims figures for the whole protection insurance industry in the UK.
Protection insurance which comes in various forms, from protecting income through to critical illnesses or death, paid out more than £5 billion in 2015, helping more than 153,700 policyholders who made a claim.
These new figures for 2015, by the ABI and GRiD include life insurance, critical illness and income protection claims bought by both individuals and employers, updating previous statistics for individual claims only.
Overall, 97 per cent of group and individual protection claims were paid, with declined claims usually due to either the claim being for a condition not covered by the policy, or the customer not disclosing important information when taking out the policy.
In total, £1.4 billion was paid in group claims during the year, with £3.6 billion paid to individuals or families who made a claim on a protection policy. Total Permanent Disability claims were again the highest refused type of claim, with a third of all claims being refused. This is most likely due to the difficulty in proving that an illness or disability will most likely be permanent.
Income protection claims had an average 92.71 per cent payout rate across the board. This resulted in 2,199 claims being refused, which is disappointing to say the least. It is also concerning that even though some insurer have high payout stats, some even 100 per cent, there still continues to be a slow uptake by consumers to protect their income.
A total of 153,739 policyholders benefited from protection insurance during 2015, with claims averaging between £6,000 and £69,000. Of those claims denied, a total of 4,819 policyholders had claims rejected, the equivalent to a total of 3.04 per cent on all protection claims during the year.
Raluca Boroianu-Omura, ABI Assistant Director, Protection and Health, said: “Insurance provides vital support to families by relieving the financial strain following a death, serious illness or injury. Products such as income protection, life insurance and critical illness can improve people’s financial resilience.
“It’s important that we encourage people to consider the financial risks if they need to leave work because of illness or injury. As well as financial support, protection insurance can help prevent people needing to leave work, and if they do need to leave due to illness or injury, rehabilitation services can help them return to work sooner. As a result, protection insurance benefits individuals and employers, and relieves the burden on the State, helping the economy to grow.”
|Types of products||Claims paid||Total value paid (£000)||Average Claim Paid in (£s)|
|Received||Paid||% Paid||Declined||% Declined|
|Total Permanent Disability||875||581||66.4%||294||33.6%||37,889||65,213|
|Whole of Life Assurance||65,672||65,664||99.9%||8||0.01%||389,080||5,925|
Source: ABI and GRiD
Lee Lovett, Chairman of GRiD, said: “These consolidated claims statistics show the hugely significant support that protection insurance provides for individuals and their families, whether via individual policies or cover provided by employers.
“Despite this, the major challenge for our industry is that a material proportion of the working population have no (or insufficient) cover and GRiD’s focus is on improving awareness and ultimately increasing the number of lives that have access to cover via their employer.”