Will my protection claim get paid?
One of the objections to protection advice (life assurance, income protection and critical illness primarily) is ‘it never gets paid out’. Well as professional life planners we can assure you that it does. But don’t just take our word for it, look at the latest statistics.
Insurers paid out a record £7.24billion in claims in 2023.
Group and individual protection policies paid out a record £7.34bn claims in 2023, new figures from the Association of British Insurers (ABI) and Group Risk Development (GRiD) reveal.
The claims, which equate to roughly £20.1m per day, were paid out to support people experiencing bereavement, illness and injury.
Individual policies paid out more than 275,000 life insurance, income protection and critical illness claims, totalling £4.85bn.
This represents a 5% increase in the number of individual claims paid and a 14% increase in the total value of claims paid compared to 2022.
The total value of individual critical illness claims increased to a record £1.2bn, £136m (13%) higher than 2022.
The number of critical illness claims also increased by 10% from 2022, with the average claim for 2023 standing at £67,267.
Continuing the trend from recent years, cancer remained the most common cause for these claims, totalling £777m.
Total pay out for individual income protection claims hit £177m. This is an increase of £3m (2%) compared to 2022 and brought the average claim pay out up to £9,425.
These increases occurred despite a drop in the number of individual income protection claims in 2023.
During the Covid-19 pandemic, there was a rise in the number of individual income protection claims, and the figures have gradually fallen since 2021.
Musculoskeletal issues such as neck and back pain were the main cause for an individual income protection claims in 2023, though mental illness claims accounted for the highest value at £37m.
As of 2023, more than 1,660 individual income protection claims have been in payment over 10 years, with 376 of those claims in payment for more than 20 years.
Claims acceptance remain high at 98.3%.
70% of unpaid claims were the result of fraud. Other common reasons for declined claims were policyholders failing to disclose existing medical conditions when they took out the policy, and not meeting the policy definitions.
The number of new individual claims paid has remained consistent at above 98%. The average claim paid rose by 9% to £17,053, compared to £15,643 in 2022.
Yvonne Braun, director of policy, long term savings, health and protection at the ABI (pictured), said: “Every single day in 2023, the protection insurance industry paid out over £20m to individuals and families affected by serious accidents, illnesses or even the deaths of loved ones.
“The financial impact of these events can be devastating, adding even more stress to traumatic situations. These figures demonstrate that insurance plays a crucial role in supporting people financially when they need it most.”
If you would like to discuss protection for yourself and your family or look at what corporate or other business protection may be suitable please get in touch.
info@brookswealth.co.uk 01733 314553 www.brookswealth.co.uk