Equivalent of £10m paid out every day in protection claims -ABI

Protection insurers paid claims to more than 129,100 customers or families last year.

Insurers paid out an average of nearly £28,000 to customers who made a claim across life insurance, critical illness insurance and income protection.

Overall, 97.2% of protection claims are paid - claims were declined for the condition not being covered by the policy, or the customer not disclosing important information when taking out the policy.

The average individual income protection (IP) policy pay out, which helps those unable to work due to illness or injury, lasted for 214 weeks (more than 4 years) and was worth £40,000. In 2015, 91.2% of claims were paid out.

The average pay-out in 2015 on a critical illness (CI) insurance policy was £66,200. The percentage of CI insurance claims being paid continues to rise, with 93.1% paid (an increase from 80% in 2005).

The ABI said "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.

Meanwhile, the average pay-out on a term life insurance policy was £53,800 with 98.2% of claims being paid. In 2015, insurers paid out more than £1.5 billion in claims.

For whole life insurance the average claim payment was £5,900 with almost all (99.99%) of claims paid. In total £389 million was paid out in 2015.

Total Permanent Disability claims averaged £65,200 with 66.4% of claims paid in 2015, up from 64.1% the previous year, and 50% in 2009.

The ABI said, before it 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".

The ABI said: "This lack of clarity led to claims being made that did not qualify. The introduction of the Statement of Best Practice 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."

Yvonne Braun, director of Policy, Long-term Savings and Protection at the ABI, [pictured] said:"Every single day, insurers pay out nearly £10m to support families through difficult times.

"Insurers want to make it as simple and easy as possible for people to claim, and it's great to see that 97% of these claims are paid."

 

 

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• Topics
• Individual Protection
• Income Protection
• Life insurance
• whole of life
• Critical Illness