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270 families helped every day by Life Critical Illness Income Protection insurance payouts 2013

Figures published today by the ABI highlight the vital role insurance plays in helping customers cope with the financial difficulties that can arise as a result of a death, serious illness or injury. 

In 2013, £3.1 billion1 was paid to 99,000 customers or families.

Helen White, the ABI’s Head of Protection, said:

"The insurance industry pays out £8.4m every day in individual life, critical illness and income protection insurance claims, making a real difference to people’s lives at some of the most difficult of times with 97% of all claims paid in 2013. At the most stressful times, insurers want to make it as simple and easy as possible for people to claim. 

"Industry initiatives such as the ABI’s Code of Practice on non-disclosure have led to a fall in the percentage of claims declined from 8% in 2007, as customers have become much more aware of which information they need to share with their insurer. It is encouraging to see this has resulted in a continuing fall in the percentage of claims that are declined; insurers are committed to helping consumers make informed decisions about which protection insurance product is right for them and how to avoid having a claim declined.” 

Read Helen White's blog: Understanding the value of protection insurance

The latest data published by the ABI shows that in 2013:

The average claim paid in 2013 for individual income protection (IP) policies was £11,500 paying out on average for 230 weeks (more than four years), to help those unable to work. (See Notes to Editors for details on group income protection claims).

The average pay-out on a term life insurance policy was £51,500 with 98.4% of claims being paid. Total claim payments were £1.3 billion.

For whole life insurance the average claim payment was £10,300 with 99.9% of claims paid. In total £449 million was paid out

The average pay-out on a critical illness (CI) insurance policy was £60,400. The percentage of CI insurance claims being paid continues to rise, with 91.8% paid (up from 80% in 2005). 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.

Total Permanent Disability claims averaged £66,700 with 62.2% of claims paid, up from 50% in 2009 [1].  Before the ABI 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”.  This lack of clarity lead to claims being made that did not qualify.  The introduction of the Statement of Best Practise 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.

1.Excludes group protection claims. Group income protection claims are not included within the data in this release. Details of these claims are available from Group Risk Development (GRiD) 

Type of Product Number of Claims Total value paid (£000) Average Claim Paid in (£s)
Received Paid % Paid Declined % Declined
Term Assurance 25,845 25,424 98.4% 422 1.6% 1,310,450 51,500
Terminal Illness 2,675 2,448 91.5% 227 8.5% 239,930 98,000
Critical Illness 16,496 15,144 91.8% 1,352 8.2% 914,888 60,400
Total Permanent Disability 669 416 62.2% 253 37.8% 27,755 66,700
Whole of Life 43,529 43,491 99.9% 38 0.1% 449,144 10,300
Individual Income Protection1 13,170 12,004 91.1% 1,166 8.9% 138,443 11,500
Total claims 102,384 98,927 97% 3,457 3% 3,080,610 31,140

 

Note: Claims paid includes those that were in payment at the start of the year and new claims where a decision was made during the year. Group protection claims are excluded.

For more information, read our 2013 ABI Protection Claims Stats Q&A.


Last updated 01/07/2016