Aviva paid out more than £870m in claims last year, helping more than 23,000 UK customers who took out policies with the firm.
The insurer paid out 96.7 per cent of all individual protection claims in 2016, including 98.9 per cent of life insurance claims, 92.3 per cent of critical illness (CI) claims and 92.6 per cent of income protection (IP) claims.
Just over 1 per cent of death and terminal illness claims made were declined, with the most common reasons due to misrepresentation of key medical information during the application process and terminal illness claims being made when the customer’s prognosis did not yet meet the 12-month criteria.
Of the 7.6 per cent of critical illness claims that could not be paid, 6.6 per cent were due to the condition not being covered by the policy, with the remainder due to misrepresentation.
Around a third of the unpaid income protection claims were due to the fact that the customer did not meet the policy’s definition of total disability in which they were totally unable to carry out their occupation, with equal proportions declined because was no loss of income experienced by the customer or because of misrepresentation of relevant medical information.
Headline figures for individual protection claims paid in 2016
| Life insurance (including terminal illness benefit) | Critical illness (Including child critical illness benefit and total permanent disability claims) | Income Protection | Total |
Number of customers |
15,525 |
4,268 |
3,549 |
23,342 |
Benefit paid out |
£522,231,139
|
£311,014,411 |
£37,032,927 |
£870,278,477 |
% of claims paid |
98.9% |
92.3% |
92.6% |
|
The claims figures come in stark contrast to the beliefs of UK adults that just 47 per cent of individual protection claims are ever paid out, as revealed in the firm's first Individual Protection Claims Report, which also contains a number of customer case studies.
A third (33 per cent) of those surveyed said they have not always been entirely frank with insurers when applying for different types of protection, supporting calls for more consumer education to limit the possibility of any claim being rejected.
In addition, half of UK adults (53 per cent) said they do not bother to read the detail on any insurance policies they purchase, while 54 per cent said they only check their insurance policies’ terms and conditions when they need to claim.
Paul Brencher, managing director of individual protection at Aviva, said: “As an industry, we must ensure the pervasive myth that insurers don’t pay out isn’t a barrier to families taking steps to protect themselves against an unexpected illness or a death.
"Publishing claims statistics is a good way for insurers to demonstrate that they put their money where their mouth is and to reassure customers that any future claim will be taken seriously.”
Michael Aldridge, innovation director at L&C Mortgages, described the statistics as impressive and said he thought they would counter the perception that insurers do not pay.
He said: "There is clearly more we can do, whilst we (and rightly so) continue to trumpet claims data highlighting 95 per cent-plus payouts, consumers are probably asking, why is this not 100 per cent, surely every claim should be paid - we’re looking at the same information but from two very different viewpoints.
"I agree that we have a continued education piece to do but I also believe there are some other fundamentals embedded within the very workings of the industry that will have to change if we are to truly change perceptions."
Emma Thomson, life office relationship director at Lifesearch, said: "Aviva's published claims statistics should provide confidence that protection policies are valuable plans to have and the detailed report is fantastic.
"The case studies clearly illustrate how people have benefited from their cover. The insight on causes of claims, why claims are declined and the extra services their claims team offers will really help to educate advisers too.
"More detail about claims stories and approach is what many of us intermediaries have been calling for, to properly highlight the valuable work claims teams actually do, so it's great to see Aviva respond to this."
simon.allin@ft.com
