Every year millions of people in the UK have to cope with the physical and emotional distress of serious illness, injury or death. It’s a risk we all face and fear, even if we dare not think about it. Last year, over 53,000 people benefited from being able to claim on insurance cover to provide some financial assistance at what is always a challenging time.
Yesterday, we published our latest figures showing £6 million was paid out every day in 2012 across life, critical illness and income protection insurance. But despite the clear value of these policies, at what can be a financially challenging time, protection policies have a relatively low take-up – according to a Scottish Widows study, less than 20% of full time employed people have critical illness cover, while fewer than one in ten have income protection insurance.
We know that we need to do more as an industry to underline the value of protection cover to increase consumer confidence in it. And the latest pay-out figures from the ABI show the steps we have taken so far are working to make a real difference to people lives.
We are pleased to see a continuing increase in the proportion of claims paid out and a fall in those declined. Insurance should deliver on customers’ expectations and the figures highlight how the industry’s work over the years has helped protection cover better do this.
The ABI’s Statement of Best Practice has worked to help people better understand what they are covered for under critical illness policies and insurers have also moved to improve the wording of their questions - formalised by the recent Consumer Insurance Act 2012 - so customers have clarity on exactly what they need to tell their insurer.
And when it comes to claiming on protection policies the industry’s agreement to improve the handling of cases of non-disclosure has seen the number of claims declined across life and critical illness insurance decrease from 17% in 2006 to 9% in 2012.
These industry-wide figures tell an encouraging story. And the ABI, with our members, will begin work this year to strengthen the consistency of the industry wide data we publish. Come this time next year, our figures can hopefully better reflect even more the value of protection insurance.
Helen White is Head of Protection at the Association of British Insurers