It’s the spring, which in the protection calendar means insurers are busy publishing their claims paid stats, something many have done annually for more than a decade.
During that time the level of insurer transparency given to advisers and consumers has increased immensely, which has typically been warmly welcomed by consumers groups and the media. But there is still a lot of debate within the industry as to whether we use claims statistics in the most effective way – and whether or not they should be published at all.
Here, we take an in-depth look at claims statistics, how to use them and why they are still integral to building confidence in protection insurance both for consumers and advisers.
1. Claims being paid continues to rise.
On average the number of protection claims paid has increased by approximately 15 per cent since 2005. Back then, when issuing claims statistics was relatively new for most providers, approximately 80 per cent of critical illness claims were paid. Today the latest collective ABI data shows that this figure now stands at 91.8 per cent.
Industry developments to prevent innocent and fraudulent non-disclosure have played a huge part in ensuring more claims are paid each year. The transparency involved in issuing claims stats will also have brought greater scrutiny to why claims were being declined.
As an industry we pay £8.1m in claims benefit every day, through life, income protection and critical illness policies, totalling £3.1bn annually. I’ve heard people in the industry say that we are not in the market of selling insurance, we are in the market of selling a promise to customers: a promise that if a certain event happens, we will look after them financially.
As an industry we are very good at keeping those promises, but unfortunately this is often contrary to popular belief.
Andrew Jenkinson, director at Drewberry Insurance, says: “The publication of claims statistics is an important part of proving that each firm, and protection as a whole, is open and transparent.
“In our 2015 consumer survey the average response when asked how often insurers pay life claims was 50 per cent, when the actual figure is over 90 per cent. People are still underestimating the effectiveness of insurance.”
2. It’s not just about critical illness cover.
When claims statistics were first published it was usually all about critical illness policies - hence the solo comparison above.
Back then there were stories on the TV and in the consumer press every month, if not every week, about a declined CI claim – and the industry’s reputation took a heck of a beating. It is easy to remember the bad stories of course but in truth most media coverage of protection insurance is very balanced and generally positive.
Today, figures for life cover and income protection products are also regularly published. Alongside the 91.8 per cent in critical illness claims, 91.1 per cent of income protection and 98.4 per cent of life claims are paid on average.