Independent advisers Drewberry has welcomed figures from the Association of British Insurers (ABI), which show £3.44 billion was paid in protection insurance claims to nearly 128,500 customers or families.
The figures for 2014, which are the latest available, show a rise from £3.08 billion paid out the previous year to help 98,900 individuals or families.
According to the ABI, insurers pay out on average £9.4 million a day to help more than 350 individuals and their families cope with the financial pressures caused by a life changing event, such as a serious illness, injury or death.
Drewberry Director Tom Conner says: “We are pleased to see claims figures rise, and indeed sales of protection insurance increase. We specialise in protection, specifically life insurance, income protection and critical illness cover, and are also passionate advocates for the cover because we know how valuable it can be.
“There can be a misconceptions that insurers will look to avoid claims. This is however, rarely the case and I hope these figures from the ABI will challenge this view and help raise awareness of how much is being paid out. At Drewberry, we believe the message is getting out there that state benefits are rarely going to provide much of a safety net and it is up to individuals to seek advice and ensure they have their own cover in place.”
Key payout headlines from the ABI
ABI figures show that each year, one million workers suddenly find themselves unable to work for more than four weeks due to serious illness or injury. These latest ABI figures show in 2014:
- Individual income protection – the average claim was just over £10,000 per annum, paying out on average for 204 weeks (nearly four years), worth £39,200, to help those unable to work. Some 92.9% of claims were paid out.
- Critical illness – the figures show 92% of claims were paid (up from 80% in 2005). There has been a steady rise in the percentage of claims paid since the introduction of the ABI’s Code of Practice on non-disclosure, which clarified which medical information customers needed to share with insurers.
- Term life insurance – the average pay out was £60,900 with 98.7% of claims being paid. In 2014, insurers paid out more than £1.5 billion in claims.
- Whole of life insurance – the average claim pay out was £7,400 with almost all (99.98%) of claims paid. In total £540 million was paid out in 2014.
Although protection insurers have been publishing their payout rates for a number of years now, Drewberry suggests that general insurance providers need to follow suit if we’re truly to build trust in our industry as a whole.