The latest from the ABI shows that the industry is paying out on claims, despite the popular uptick comments section of MailOnline. The fact is a record £6.8 billion was paid out in individual and group life insurance, income protection and critical illness claims in 2021, according to the latest figures from the Association of British Insurers (ABI) and Group Risk Development (GRiD). This equated to £18.6 million a day, £1.6 million a day more than 2020’s previous record.
The bumper increase in individual protection claims occurred despite a 1.6% drop in the total number of new claims paid. This is due to more individual term assurance and critical illness claims, which have much higher values. The average claim payment for term assurance was £61,944 and £67,500 for critical illness, which is consistent with 2020.
This is the third year in a row that the average individual payout has increased, and the average value for a claim is up 9% on 2020, to £14,994.
Covid-19 payouts almost double
Payouts for Covid-19 related individual claims almost doubled in 2021, to £261 million, despite the number of claims paid remaining almost identical to 2020.
This was due to a 69% increase in term assurance claims, where the average payment was £69,760.
98% of claims accepted
Continuing the trend of the last three years, 98% of both individual and group claims were paid in 2021. The main reason behind an individual protection claim being rejected was ‘non-disclosure’. This is when a customer doesn’t tell their insurer something at the outset that might have affected the insurer’s decision to provide cover and the price of that cover.
Individual Income Protection fell by 14%
The number of individual income protection claims fell from 17,000 to 14,600.
This drop could have been for a number of reasons, including more people still being on the Government’s furlough scheme and higher unemployment levels.
Insurers also increased their early intervention offerings in 2021, with specialist support services and rehabilitation schemes, making it less likely for issues to reach the point of making a claim.
40% more claims for musculoskeletal conditions
Individual income protection claims for musculoskeletal conditions increased to 5,012 in 2021.
This was largely driven by the return of products that had shorter deferred periods, which had been stopped during the pandemic, and more people using limited term payment products.
The increase has also been linked to more people working from home, with unsuitable working environments and equipment leading to back problems.
20% fewer mental health claims
After a significant rise in mental health claims under individual income protection in 2020, claims decreased by almost 20% in 2021. However, they are still higher than in 2019, suggesting that the pandemic continues to have an impact on the UK’s mental health.
Roshani Hill, Assistant Director, Head of Protection and Health, at the Association of British Insurers, said: “Experiencing loss, injury or illness can be a deeply distressing time. Coupled with the backdrop of a global pandemic and financial uncertainty with the cost of living crisis, the role of insurance as a financial safety net is arguably more important now than ever before.
“Payouts for Covid-19 related claims almost doubling in 2021 is a stark reminder of the devastating impact the pandemic has had on society and people’s lives. Although nothing will ease the distress of loss, protection insurance is there to reduce some of the financial risks and stresses that can accompany these difficult and unpredictable events.”
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