Income Protection  

Mutuals pay out 94% of IP claims

Mutuals pay out 94% of IP claims

Mutuals paid out on more than 94 per cent of income protection claims in 2018, according to trade body the Association of Financial Mutuals.

Research by the body into nine of its members that offered IP policies showed that combined, they paid out more than £26m in claims — an 18 per cent increase on 2017.

The number of claims paid by these members — British Friendly, Cirencester Friendly, Dentists’ Provident, DG Mutual, The Exeter, Holloway Friendly, PG Mutual, Shepherds Friendly and Wiltshire Friendly — also increased by 15 per cent to 5,721.

These claims represented 94.4 per cent of claims received, compared to the 88.1 per cent of claims paid by all providers in 2018, according to the Association of British Insurers.

According to the Association of Financial Mutuals the average claim in 2018 ran for 16 weeks and surgical claims made up the highest value at £6,605.

The greatest number of claims received were for musculoskeletal problems, 22 per cent, followed by accident or injury at 19 per cent.  

Martin Shaw, chief executive of AFM, said: "The results provide further evidence that all IP providers are in the business of paying claims whenever they can. 

"Customers, confident that their claim will be handled fairly, are increasingly aware of the importance of protecting their family’s income and future by taking out income protection and 2018 sales figures indicate that they are turning more than ever to a mutual provider.

"A claim is the key indicator of the value of any insurance policy, and by consistently paying more claims than the industry as a whole, the mutual sector is demonstrating loyalty to its customers and providing a business model that works for them."

Stuart Tragheim, chief executive at Holloway Friendly, said the mutual’s purpose as a business was to look after its members when they needed to claim on their policy.

He said: "We are really proud of the support we provide to members when they claim and our claims record. 

"We look to pay every claim wherever we can and treat every single claim on its merits and provide a range of rehabilitation support to get our members back to work so they can get their lives back on track."

Commenting on the findings, Adam Higgs, head of protection at Protection Guru, said: "The work that the AFM is doing is commendable. 

"Focusing on paying claims and treating customers fairly is paramount and an important part of informing customers that these policies do what they promise."

Alan Knowles, managing director of Cura Financial Services and chair of the Protection Distributors Group, said seeing the increase in successful income protection claims from AFM members highlighted that more and more people were falling ill and claiming on these policies. 

He added: "The fact that average claims lasted 16 weeks is a testament to the support services that the providers offer their members, to help them adapt or recover from their ill health, and return to work as soon as possible.