Protection  

Zurich reveals 94% payout rate on income protection

The head of retail propositions for Zurich said it was time the industry collaborated to help encourage people to consider the benefits of income protection.

He said: “Across the UK we remain hugely under-insured against the risks of being unable to work and provide financial support to our families in the event of illness. At the same time, we are seeing the cap in state benefits starting to take hold.

“The cost to those people whose lives are turned upside down by illness, as well as that to businesses and the state, means the current situation is unsustainable.”

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He said that, to try and address how the industry might start to tackle this problem, Zurich intends to launch research that will explore how people can be encouraged to consider income protection.

This comes as the insurer reported a 94 per cent payout rate for income protection claims in 2013, an increase of 90 per cent on 2012.

According to the insurer, Zurich UK Life paid out £12.3m to 689 income protection customers who were unable to work for long periods through illness, accidents or disability.

This amount is part of a total of £188.6m paid in protection related claims last year – including £65.2m for critical illness claims, £12.3m for income protection and £111m for death claims.

Of the 689 income protection customers receiving payments in 2013, 86 were new claims.

Key statistics

Common causes of claims

Musculoskeletal problems (including spinal injuries) (23%)

Neurological conditions including stroke (19%)

Mental health and cancer both resulted in 16 claims.

The largest annual benefit was £59,000 a year.

Adviser View

Tom Conner, director of London-based advisers Drewberry Insurance, said: “There is a trend towards insurers being more transparent with payout rates.

“We do use Zurich but I’ve not dealt with them much. In general though, we see very few claims declined. Last year we didn’t have any cases where I didn’t agree with the outcome.”