The Association of British Insurers (ABI) and Group Risk Development (GRiD) have published claims figures for the whole protection insurance industry showing that insurers paid £5bn overall to customers last year.
Protection industry statistics show for 2015:
⦁ More than £5bn was paid last year in group and individual protection insurance claims, the equivalent of almost £14m a day.
⦁ Protection insurers paid more than 153,700 claims in total last year.
⦁ Overall, 97% of group and individual protection claims are paid. When claims are declined this is 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.
The claims payout figures are shown in the table below:
Raluca Boroianu-Omura, assistant director, protection and health at the ABI, 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."
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."
Broker view
Steve Berry, protection manager for First Complete, part of LSL Financial Services said: "Protection insurance is often wrongly perceived as an opportunity for brokers to upsell, offering little benefit to the customer.
"The ABI's latest figures highlight not only the importance of having protection insurance, but just how regularly it is paid out. However, protection is clearly still being undersold, particularly income protection.
"For most people their regular weekly or monthly income is their most important financial lifeline and proper income protection will enable that to continue if the unexpected happens. With only 30,000 claims for income protection in 2015, these figures clearly show more families need to talk about protection insurance."
He continued: "Moving forward, the perception of brokers selling protection needs to change. Too often brokers efforts in selling protection are dismissed as ‘life assurance salesmen just looking for a commission'.
"Well I know some quality brokers who are justly proud to call themselves ‘life assurance salesmen' because in times of trouble they create money for their customers where none existed before. So, alongside these figures we therefore need to see hard hitting facts about the financial reality of not being covered."
