New figures released by the Association of British Insurers (ABI) and Group Risk Development (GRiD) show that the insurance industry paid out more than £5.3 billion in protection claims in 2018 – a £200 million increase year-on-year.
The numbers also revealed that:
- The number of claims paid surpassed 200,000 for the first time ever
- Nearly every claim made was paid (97.6%)
- Average life insurance payouts reached £81,000, the highest average on record
- More than 35,000 families/beneficiaries were supported following an unexpected bereavement, to the tune of £2.9 billion
- Payouts equal to £14.5 million paid every single day
The ABI recently launched a calculator to help consumers better understand their financial exposure to income shocks caused by being left unable to work after falling ill or injured. Percy The Protection Calculator can be found on the ABI’s website at: www.abi.org.uk/percy
Roshani Hewa, Assistant Director, Head of Health and Protection at the ABI, says:
“It’s good to know that families going through some of the worst times, dealing with a loss and serious injury or illness, are at least getting more support from insurance products than ever before. The growing size of a typical life insurance claim shows how much of a difference such cover can have, and the potential difficulties families without it might face.
“Falling ill or being injured can be traumatic, especially if you find yourself unable to work. Protection insurance is there to ease the financial burden, so it’s heartening to see the levels of protection showing such positive growth, particularly considering the excellent mental health support many products provide.”
Figures for the whole protection market (individual and group):
|
Products |
Claims Paid |
Percentage new claims paid |
Total value paid (000s) |
Average value of claim paid |
|
Critical Illness |
16,452 |
91.6% |
£ 1,166,872 |
£ 70,925.83 |
|
Term Life Insurance |
35,470 |
97.4% |
£ 2,882,604 |
£ 81,268.78 |
|
Total Permanent Disability |
476 |
70.2% |
£ 36,781 |
£ 77,271.01 |
|
Whole of Life Insurance |
121,822 |
99.98% |
£ 577,453 |
£ 4,740.14 |
|
Income Protection |
25,843* |
88.1% |
£ 648,815 |
£ 22,058.45** |
|
All Protection Products |
202,738 |
97.6% |
£ 5,312,524 |
|
* Includes figures from the Association of Financial Mutuals
**This is the total number of claims in payment at the end of the year
***This is the average annual value of claims in payment at the end of the year
|
Individual Protection Commentary In individual protection, the number of claims paid continued to rise, with an increase of 16,000 year-on-year. Individual income protection saw the number of claims double, supported by the inclusion of AFM data, which lead to an increase in payouts of around £30 million. Cancer continued to be the highest cause of critical illness claims (63%), whilst muscoskeletal conditions led to the highest proportion (30%) of income protection claims. Payout rates saw a positive increase in total permanent disability and income protection in particular and, for the first time, we experienced a unanimous increase in value of claims across every single product line. |
Group Protection Commentary In group protection, as well as again supporting a record number of families with a financial payment, group risk providers helped people in many other ways. Last year, nearly 5,600 employees were helped back to work after a period of sick leave and there were nearly 75,500 interactions during 2018 with the additional help and support services that are funded by group risk insurers, giving daily value to employers regardless of whether or not a claim was made under their policy. Cancer was the main cause of claim across all three group risk products and mental illness was marginally the second top cause of claim under group income protection policies.
|
Products explained
- Critical Illness: A policy that pays out a lump sum, or ongoing payments, when the policyholder is diagnosed with a specified illness. Cancer is the most common cause of claim.
- Term Life Insurance: A policy that will cover the policyholder for a specified number of years, usually until retirement age. This policy pays a lump sum, commonly used to cover outstanding mortgage payments, if the policyholder dies unexpectedly or prematurely.
- Total Permanent Disability: This benefit pays a lump sum, or lifelong payments to the policyholder if they become permanently disabled.
- Whole of life Insurance: A product that covers the policyholder until the day they die. It allows the policyholder to build a small pot of savings to use to cover funeral costs, or to leave a small inheritance to family members.
- Income Protection: A policy designed to help fill income gaps when a person is unable to work due to illness or injury. It will usually cover a percentage of the policyholder's salary and will often provide support services to help employees back into work.
ENDS
Notes for Editors
Enquiries to:
Malcolm Tarling 020 7216 7410 Mobile: 07776 147667
Sarah Cordey 020 7216 7375 Mobile: 07860 189071
Dominic Stannard 020 7216 7350 Mobile: 07725 245838
Melanie Fernandes 020 7216 7660 Mobile: 07720497617
1. The Association of British Insurers is the voice of the UK’s world leading insurance and long-term savings industry.
A productive, inclusive and thriving sector, we are an industry that provides peace of mind to households and businesses across the UK and powers the growth of local and regional economies by enabling trade, risk taking, investment and innovation.
2. An ISDN line is available for broadcast
3. More news and information from the ABI is available on our web site, www.abi.org.uk.