The protection industry pays out £6.2bn on 2020 claims across all insurers
Record figures released by the Association of British Insurers (ABI) shows that the insurance industry paid out more than £6.2 billion in protection claims during 2020. This is a year-on-year increase of more than £438 million (8%).
The percentage of claims paid across all insurers has stayed largely consistent at 98%, compared to 98.3% in 2019, which was the highest on record. The equivalent of £17 million was paid every single day in 2020. ( £1.16m more per day than in 2019).
- Over £3.4bn in life insurance claims were paid in 2020
- An increase of £349m on the previous year
- The average payout on term life insurance policies was £79,304
Critical Illness claims
- Claims payouts for critical illness during 2020 were recorded at £1.13bn
- A 6% fall in the number of critical illness claims paid last year
- £688.2m was paid out in individual income protection claims for mental health
- An average claim size of this nature was £22,170
- A rise in mental health claims under individual income protection policies from 10% to 12% in 2020
Charlie Campbell, the ABI’s manager, health and protection, commented: “The record payout to help families cope with death, illness and injury shows how insurers give vital financial support to their customers during what are difficult and stressful times. The pandemic reinforced just how valuable the protection provided by insurers has been. The high number of claims paid should give people the confidence they can trust that their insurance provider will be there when they need them.
“However, non-disclosure of relevant medical information at the applications stage, and the condition not being covered were the two main reasons for the 2% of claims that were declined. This emphasises the need for customers to disclose all relevant health information when applying for cover, and for insurers to continue to improve the clarity and understanding of what is and what is not covered”.
Paul Brencher, managing director, individual protection at Aviva UK, and chair of the ABI’s Protection Board, said: “The financial risks from ill-health are not new, but the pandemic has dramatically highlighted how the financial resilience of families can be so easily tested. There has never been a more important time to demonstrate the benefits of protection. The safety nets it can provide to customers and their families in difficult times, and its relevance for employers and financial advisers.
Source: Cover Magazine May 2021
For full claims information please click to go through to the ABI website.
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