Praise has been heaped on the industry by the Financial Ombudsman Service (FOS), following its review from April 2006 to March 2007.
The review reported a record 17% decline in the number of disputes received during the year relating to income protection (IP) and critical illness (CI) cover.
Of the insurance complaints received, IP amounted to 5.5%, CI totalled 4.5% and private medical insurance added up to 2.5% of claims. The remaining 87.5% was attributed to "other general insurance complaints".
Nick Kirwan, chairman of the Association of British Insurers Protection Committee, said the result was down to the work of advisers and intermediaries whose roles should "not be underestimated as they have generated a lot of awareness to customers".
"They are clearly playing a big part," he said.
He welcomed the news, commenting: "It was great to see this after we have done so much work in tackling the causes of unpaid claims. This is real evidence that what the industry is doing is paying dividends," he added.
However, he also said there was no room for complacency. "We have to keep these numbers moving in the right direction," he added, agreeing with the findings that said that, for many consumers, an application for CI and IP policies had become an examination or a memory test, the results of which are only revealed if the consumer ever comes to make a claim.
The report also pointed out that on the basis of disputes it is required to resolve, the FOS was concerned that what some insurers required consumers to disclose about their health was probably beyond many people's capabilities and comprehension – especially in the context of a sales process that is hardly conducive to the serious consideration of complex questions about medical history.
Dale Tranter, research product developer at Sesame, argued that it would be nice to see two years of reductions before claiming the worst is over. The FOS' desire to go beyond the current law in determining what constitutes non-disclosure is not going to get the figures down, he added.
Damaging cases continued to provide a regular source of publicity that threatens public trust and confidence in insurance products generally, the review claimed.
It also pointed out that work in achieving a fair outcome in other such cases is hindered by the clear injustice of the law in relation to "non-disclosure" in consumer insurance contracts.
It hinted that, while there had been calls from all sectors of the industry for reform on non-disclosure, actual reform is set to be some years off still. Kirwan added that it is still not certain that a reform will go ahead but that it is being considered.
