The importance of personal protection policies should not underestimated, as recent data shows. According to the Association of British Insurers (ABI), a record £4.7bn was paid out in personal protection claims during 2016 – equivalent to around £13m per day. As well as critical illness, this also included life assurance, total permanent disability, whole-of-life assurance and income protection.
The figures represent nearly 167,000 claims, with 97.3 per cent of new claims being successful. With regards to CI, the total value paid out topped £1bn, with a 92.2 per cent payout rate and an average claim value of just under £68,000. These figures are largely unchanged year-on-year.
New progress
This year’s survey has seen a decline in the number of policies assessed, but this is largely due to Aviva streamlining its offering from six to three. Noticeable absentees this time include NFU Mutual, which has recently overhauled its protection suite, and the Prudential’s insurance arm, VitalityLife. But Scottish Widows has returned to the study this year.
A number of channels are available for firms to distribute CI plans. Customers can go direct, use a company representative, or an adviser. Ideally, consumers should seek advice, not only to ensure that they understand their plan, but also to have confidence that it is set up to meet their individual needs.
Total sales of CI plans are shown in Table 1, and despite only three firms providing figures, the results are encouraging. LV and Zurich have both witnessed a sharp uptick in sales compared with last year’s survey: LV’s 5,706 compares with the 3,780 sold in 2016, and Zurich’s 16,011 is up on the 13,508 reported last year.
Royal London’s 19,776 is down slightly on the 21,606 reached by the same point in 2016, but the firm has been growing business rapidly over the past few years nonetheless. Full-year figures show all three firms saw a sharp uptick in sales between 2015 and 2016.
Alan Lakey, director at CIExpert, sounds a word of caution on sales figures. He notes that it is tough to differentiate between business that is new and that which is as a result of re-broking.
“Critical illness lends itself to re-broking because clearly, if I’ve arranged the best plan in the market in 2012 and now I can give the client an additional 40 conditions at very limited extra cost – subject to them being able to afford it – they are bound to say yes.”
