The share of protection claims paid by the industry reached a record 98.3 per cent in 2019, according to the Association of British Insurers (ABI) and Group Risk Development (GRiD).
Data from the ABI, published yesterday (May 11), showed the industry paid out more than £5.7bn on protection claims last year.
The value represented a year-on-year increase of more than £470m, with the industry predicted to see higher than usual numbers of claims in the future from customers, companies as well as the NHS.
The ABI also found that payouts equalled £15.8m daily, up by £1.3m a day compared with 2018. Life insurance claims payouts rose by more than £19m year-on-year to reach £3bn.
Roshani Hill, head of protection and health at the ABI, said: “The biggest ever pay out in protection insurance shows how vital this cover is for people who need support at a difficult time.
"The high number of claims paid should give people confidence they can trust that their insurance provider will be there when they need them, helping families get back on their feet and providing valuable safety nets when the worst happens.
“During uncertain times, when insurers are doing what they can to support individuals, families and the NHS, being able to have this confidence is more important than ever.”
Cancer was the biggest single reason for individual critical illness claims, according to the data.
For individual income protection claims, the biggest three reasons were musculoskeletal, mental health and cancer. A total of £60.5m was paid in individual income protection claims for mental health, with the average claim stood at £15,728.
Meanwhile, non-disclosure - when a customer does not tell their insurer something that might affect the insurer’s underwriting decision - was the biggest reason for a claim to be declined.
Naomi Greatorex, director at Heath Protection Solutions, described the record percentage of claims paid as a "positive message" for the protection industry.
She said: "As an adviser, claims being paid out is the ultimate reason why I do my job, and this is great confirmation that the industry is delivering.
"It is so important to make sure our customers hear these positive messages, to give confidence, as this is not always their perception.
"I have also seen some positive improvements around claim processing and automation. Ultimately the speed and ease of dealing with insurers at claim stage is also an important consideration when looking at overall customer claims experience."