Further statistics (individual and group) published by the ABI and Grid revealed:
- Life insurance claims paid hit 35,604 in 2017.
- 98 per cent of life insurance claims paid out, at an average value of £78,000.
- Just over 28,000 income protection claims were paid.
- 87 per cent of new income protection (IP) claims were paid at an average value of £21,000.
- Critical illness claims hit 15,962.
- 92 per cent of critical illness claims paid out, at an average value of almost £73,000.
The joint reporting by the two industry bodies came about following a change in 2016 in ABI methodology for reporting individual IP claims, bringing the individual sector more in line with Grid methodology for the group sector.
The focus is now on actual new claims paid in each discrete year rather than total in-payment claims, the latter of which - says the ABI - might be considered misleading as it includes historic data.
It’s worth noting here that the PMI sector (individual and group) doesn’t publish claims statistics. Moratorium underwriting means that claims statistics would have limited value in the PMI market, according to Brian Walters, principal of Cheltenham-based health insurance broker Regency Health.
"Private medical insurers do not generally publish claims statistics so we don't have an objective picture of the percentage of, or reasons for, declinatures in the PMI market,” Mr Walters says.
“That said, medical insurers have a good reputation for paying claims, as evidenced by the overall high customer satisfaction ratings on the Which? surveys.
“Moratorium-based policies will see more declinatures than underwritten policies due to the lack of clarity over personal medical exclusions. Consumers that arrange their PMI through a specialist broker are more likely to understand the limitations of their policy."
Addressing objections
Meanwhile, lack of trust, although an issue, is not the only limiting factor in the protection market, according to The Syndicate’s research.
In fact, trust appeared fourth in the list of top reasons for not buying protection behind: ‘it’s too expensive’ (61 per cent); ‘I don’t like the idea of paying money over the long term when I may never need the cover (55 per cent); and ‘I prefer savings to protection’ (53 per cent).
Many protection insurers have already started to develop solutions to help break down these barriers – for example, increasing policyholder engagement with insurance throughout the policy duration via added value services, such as virtual GP helplines, health MOTs and employee assistance programmes (EAPs).
When it comes to pricing and claims, improved transparency is needed. Removing jargon and excessively long terms and conditions and talking to customers on a personal level are all key.
Linsey Sutton, life insurance team manager at Assured Futures, comments: “As brokers we have a responsibility to ensure that we highlight the importance of the application process and that clients should carefully consider their answers or risk having a claim turned down.
“We ensure that questions are asked exactly as the insurer has worded them to capture the exact detail the insurer requires.”
Mental health disclosures
Meanwhile, trust in the protection industry took a hit recently thanks to an exclusive report in The Guardian, which detailed examples of individuals with a track record of mental illness being refused life insurance.
