Income Protection  

Protection industry pays out £5.3bn

Protection industry pays out £5.3bn

The insurance industry has paid out more than £5.3bn in protection claims in 2018, according to new data.

The latest figures from the Association of British Insurers and Group Risk Development, published today (May 1), showed the number of claims surpassed 200,000 for the first time and 97.6 per cent of those claims were paid.

Life insurance saw the most claims paid out as 99.98 per cent of whole life insurance claims were paid out in 2018 alongside 97.4 per cent of claims on term policies.

By comparison, 88.1 per cent of income protection claims were paid while 91.6 per cent of all those who claimed on their critical illness policy received a payout. However, on total permanent disability claims the payout rate lagged behind at 70.2 per cent.

The figures for the whole protection market showed the average life insurance payout reached £81,000 — the highest average on record — while more than 35,000 beneficiaries were supported following a bereavement.

In individual protection, where policies are chosen and taken out by the individual, the number of claims paid continued to rise with an increase of 16,000 year-on-year. 

The number of consumers claiming on individual income protection doubled in 2018 and led to an increase of around £30m, with muscoskeletal conditions accounting for 30 per cent of claims.

In critical illness, cancer continued to be the highest cause of claims. 

This was the same in group protection — where consumers receive insurance through their employer — as cancer was the main cause of claims across life, illness and income protection.

The group risk industry also saw a rise in the number of additional help and support services supplied with protection.

In 2018, nearly 5,600 employees were helped back to work after a period of sick leave and there were nearly 75,500 interactions with the services funded by group risk insurers.

Paul Avis, marketing director at Canada Life Group Insurance, said out of the 2.5m people covered under a group income protection scheme, only 3,551 returned to the workplace in 2018 before claiming, due to using the early intervention services provided.

He said: "With some insurers, employees can have access to a nurse on day, especially useful for subjective, complex conditions. We have found that 95 per cent of people who use our early intervention services do not become claimants and are back in work normally within 5-7 weeks.

"The majority of early intervention referrals are also covering illnesses that line managers find the most difficult to deal with in the office, such as stress, mental illness or back pain.

"These are absences that we can genuinely help to manage at no additional cost to the premiums paid and is been proven to get employees back to work."

Mr Avis said advisers needed to do more to promote these services to their corporate customers.

Commenting on the overall findings, Tom Baigrie, chief executive LifeSearch, said: "These numbers from the ABI are a clear demonstration of the good that the protection market does.