Following SCOR’s market survey of Total and Permanent Disability (TPD) in 2024/25, Phil Cleverley, chief underwriter, and David Ferguson, underwriting and claims development manager, summarise the findings.
TPD has long been a subject of scrutiny within the insurance industry due to the complexities surrounding claims assessment and the relatively high rate of declined claims.
Following an initial survey in 2017, the latest survey covered around 90% of the market. It asked for details of underwriting selection/definitions and the volume of TPD claims received, paid and declined. It also asked for claims assessors' views on TPD claims assessment and the value of the product.
The number and percentage of claims paid has increased since 2017 (figures in red) as shown in the table below.
Key highlights:
- A clear upward trend in the number of claims and the proportion paid
- 526 TPD claims received in 2023, of which 361 were paid, representing a 69% success rate, indicating a real improvement in customer outcome
- A reduction in claim numbers and payment rates in 2020, likely influenced by the COVID-19 pandemic, which disrupted work patterns and complicated assessments
- A significant increase in the value of claims paid, with £26.7 million paid in 2023 compared to £14.6m in 2020 and £22.5m in 2017
Although TPD claims represent only about 2% of all critical illness (CI) claims, the compensation amounts underscore its value to customers.
The Association of British Insurers (ABI) released claims information shortly after the survey, confirming that during 2024 the industry paid 406 new TPD claims for a total value of £33m.
Do TPD definitions cause claims issues?
Insurers offer a combination of 'own occupation' and 'ADW's/Work Tasks' for sedentary or light skilled manual jobs respectively, ADWs are predominantly for manual less skilled occupations.
On average, 59% of TPD policies use the own occupation definition, with the remaining 41% relying on ADWs.
Older definitions such as ADLs and 'any occupation' have largely been phased out due to their restrictive nature and poor claims performance. The any occupation definition was challenged in the landmark case of Sargent v GRE (UK) Ltd in 1997.
Anecdotal evidence suggests that own occupation claims are more likely to be successful; an estimated 80% are paid, compared to around 50% for ADWs. Legacy definitions still generate occasional claims but their relevance is diminishing.
A deeper dive into claims decisions and claims handling
Approximately 67% of declined claims were due to the claimant failing to meet the policy severity or permanency criteria. The remaining 33% were due to misrepresentation. Insurers have attempted to address these issues by refining application form questions, conducting post-issue sampling and improving product literature.
Claims assessor feedback highlighted the unique challenges of TPD claims compared to life or CI claims.
Assessments are often more subjective and require extensive medical evidence, including specialist evaluations to determine the permanence of symptoms. These complexities contribute to higher assessment costs and a negative perception of the benefit.
Nonetheless, assessors consistently affirmed the value of TPD and expressed optimism for the product and its future.
A window into Ombudsman referrals
From Financial Ombudsman Service (FOS) claims data in 2023, SCOR reviewed 20 declined cases. Of the denied claims, 18 were declined due the definition not being met while two were due to misrepresentation.
Just three were upheld in the customer's favour. The FOS generally supported insurers' decisions, citing clear product literature and fair assessment processes.
Some claims were initially submitted as CI illness claims but were redirected to TPD after the medical condition was found to be outside the CI coverage, thereby inflating TPD claim volumes and raising questions regarding why claims were pursued so far. It also highlights the ongoing issue of customer misunderstanding at the point of sale and during the claims process.
An expert view
SCOR shared the findings with Alan Lakey, founder, CIExpert, who commented:
"I was surprised and pleased to see that around 50% of activity-based claims are being paid as my own survey from around 15 years ago showed a 70% declinature.
"TPD is an important adjunct to a CI plan as it theoretically covers those permanently disabling conditions that fall through the net but only if advisers and clients have the confidence that claims will be met (ignoring misrepresentation)."
TPD remains a valuable benefit
SCOR's 2025 TPD survey shows that while the claims payment rate has improved significantly, there is scope for improvement.
The survey confirms that own occupation definitions are more prevalent and perform better than ADWs and that problematic older definitions are largely no longer in use.
However, a lack of detailed analysis on claims outcomes by TPD definition suggests an area for future focus by insurers.
The FOS analysis suggests that insurers are acting fairly and providing clear information, but customer understanding remains a challenge, so more can be done.
Ultimately, TPD remains a meaningful and financially significant benefit, SCOR expresses gratitude to the participating insurers whose contributions have helped illuminate the path forward for improving perceptions and performance of TPD in the market.
