Insurers paid out £8.4m every day in 2013 in individual life, critical illness and income protection insurance claims, a daily £2m increase compared with 2012, the Association of British Insurers revealed.
Around 97 per cent of all claims were paid in 2013, representing a total of £3.1bn, the ABI reported.
The average claim paid out in 2013 for individual income protection policies was £11,500, paying out on average for 230 weeks.
The average pay-out on a term life insurance policy was £51,500 with 98.4 per cent of claims being paid.
Total claim payments were £1.3bn.
For whole life insurance the average claim payment was £10,300 with 99.9 per cent of claims paid.
In total £449m was paid out.
The average pay-out on a critical illness insurance policy was £60,400.
The percentage of CI insurance claims being paid continued to increase, with 91.8 per cent paid, up from 80 per cent in 2005.
The ABI revealed 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 per cent of claims paid, up from 50 per cent in 2009.
Before the ABI introduced the standard definition for total permanent disability 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 ABI stated.
Helen White, head of protection at the ABI, said: “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 per cent 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.”
Dougy Grant, protection director at Aegon UK, adds: “The figures released by the ABI today shatter the illusion that insurance companies don’t pay claims and demonstrate how important it is to have cover in place.
“People should continue to be encouraged to think about their protection needs and whether they can afford to leave their families unprotected. A loss of income through being unable to work, falling ill or a death in the family takes not only an emotional toll but a financial one too.”