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Record amount paid out in vital protection insurance claims

Almost £10m is paid out every day to help customers cope with the financial difficulties that can arise as a result of a death, serious illness or injury. Protection insurance includes products such as life insurance, critical illness cover and income protection, which help families cope with financial strains following a life changing event.

ABI figures show for 2015:

  • A record £3.6bn was paid last year in protection insurance claims, the equivalent of £10m a day.
  • Protection insurers paid claims to more than 129,100 customers or families.
  • Insurers paid out an average of nearly £28,000 to customers who made a claim across life insurance, critical illness insurance and income protection.
  • Overall, 97.2% of protection claims are paid. When claims are declined this is usually due to either the claim being for a condition not covered by the policy, or the customer not disclosing important information when taking out the policy.

Yvonne Braun, ABI Director of Policy, Long-term Savings and Protection, said:

Yvonne Braun"Insurance can help to relieve the financial strain on families following a death, serious illness or injury. Every single day, insurers pay out nearly £10m to support families through difficult times. Insurers want to make it as simple and easy as possible for people to claim, and it’s great to see that 97% of these claims are paid.

"Protection insurance does not just help relieve financial distress, it also provides vital practical support. For instance, income protection supports people with rehabilitation services and back to work support when they have to leave work because of illness or injury.

"Serious illness or injury can have a massive impact on people, financially as well as personally. Products such as income protection, life insurance and critical illness cover improve people’s financial resilience, safeguard their financial future and provide peace of mind."

ABI figures show:

The average individual income protection (IP) policy pay out, which helps those unable to work due to illness or injury, lasted for 214 weeks (more than 4 years) and was worth £40,000. In 2015, 91.2% of claims were paid out.

The average pay-out in 2015 on a critical illness (CI) insurance policy was £66,200. The percentage of CI insurance claims being paid continues to rise, with 93.1% 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.

The average pay-out on a term life insurance policy was £53,800 with 98.2% of claims being paid. In 2015, insurers paid out more than £1.5 billion in claims.

For whole life insurance the average claim payment was £5,900 with almost all (99.99%) of claims paid. In total £389 million was paid out in 2015.

Total Permanent Disability claims averaged £65,200 with 66.4% of claims paid in 2015, up from 64.1% the previous year, and 50% in 2009. 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 led to claims being made that did not qualify. The introduction of the Statement of Best Practice 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.

Type of Product Number of Claims Total value paid (£000) Average Claim Paid in (£s)
Received Paid % Paid Declined % Declined
Term Life Insurance 29,248 28,734 98.2% 514 1.8% 1,545,616 53,790
Terminal Illness 4,022 3,740 93% 282 7% 375,645 100,440
Critical Illness 18,307 17,045 93.1% 1,262 6.9% 1,128,140 66,186
Total Permanent Disability 875 581 66.4% 294 33.6% 37,889 65,213
Whole of Life 65,672 65,664 99.9% 8 0.01% 389,080 5,925
Individual Income Protection1 14,664 13,372 91.2% 1,292 8.8% 131,026 9,799*
Total claims 132,788 129,136 97.2% 3,652 2.8% 3,607,396 27,935

*Individual Income Protection policies may pay out for a few months or for many years. This figure is an average of all new and on-going claims during 2015.

For more information, read our 2015 ABI Protection Claims Stats Q&A.


Last updated 01/07/2016