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Insurers pay out 6 million every day to help families deal with death serious illness or injury

 New figures underline the value of protection cover 

  • 98% of life insurance claims paid
  • 92% of income protection claims paid
  • 91% of critical illness claims paid

Over 53,000 people benefited from vital financial support in 2012 to help deal with the unexpected impact of serious illness, injury or a family death. According to latest figures from the Association of British Insurers (ABI), insurers paid out over £6 million every day across life, critical illness and income protection insurance, a 4% increase on the previous year.

ABI member insurers have worked to make sure customers benefit even more from their protection policies by helping people better understand their cover and what they can claim for, as well as improving the handling of claims. This, along with industry effort to help customers understand the type of information they must provide when they buy protection policies, has seen the number of declined claims continue to fall. For example, the total number of claims declined across life and critical illness insurance decreased from 17% in 2006 to 9% in 2012.

Stephen Gay, Head of Life, Savings and Protection at the ABI, said:

"In 2012 insurers paid out more than £6 million every day to help families dealing with the financial impacts of death, serious illness or injury. These payments provide valuable support to customers facing very difficult circumstances.

"People often make a claim on protection cover at what can be a very challenging time, so insurers want the claims process to be as smooth and straightforward as possible for their customers. This is why we have worked to help people better understand what their policies cover and don’t cover, and improve claims handling in complex cases. It is good to see this resulting in a continuing fall in the number of declined claims.”

2012 protection claims pay-outs included:

  • £4 million a day paid out across 28,000 families for life insurance claims, with an average pay-out of £49,000.  98% of claims were paid, up from 97% in the previous year.
  • Over 11,700 people received an average of £70,000 from critical illness policies. The equivalent of £2.2 million was paid every day and 91% of claims were paid.
  • Over 13,200 people received payments from income protection policies, with insurers paying out an average of just over £9,000 per claimant.

8% of income protection claims received either stopped payment in the 2012 year or were declined due to fraud or the customer not giving their insurer full and correct information when they bought the insurance. This compared with 12% in 2011.   

The small number of declined claims reported were due to fraud or customers not giving their insurer important information about their circumstances when they bought the insurance.

ABI to refine claims definitions

The ABI is also working with its members to refine the definitions insurers use to report claims pay-out rates and to ensure greater consistency across the industry. A set of common definitions will be developed through an ABI led initiative, and will be used to report 2013 data, beginning in early 2014.

Stephen Gay added:

"These latest figures illustrate the positive effect of the work the industry has done so far to help people benefit from protection insurance. The new protection claims definitions to be developed will ensure consistency in how protection insurance claims figures are reported.”

Table: breakdown of claims

Cover:

 

Number of claims Value of claims
Received Paid Declined Paid £ 000's
2012 2011 2012 2011 2012 2011 2012 2011
Critical illness and TPD 12,978 15,060 11,737 13,408 1,241 1,653 820,893 805,243
Life Insurance 28,720 32,540 28,203 31,581 517 959 1,390,490 1,289,809
Income Protection 14,407 15,023 13,299 13,266 1,108 1,757 123,597 156,116
Total claims 56,105 62,623 53,239 58,254 2,866 4,369 2,334,979 2,251,168

Last updated 01/07/2016