Income protection insurance claim statistics

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If there’s one thing us Brits as a nation love more than anything (save soap operas, whingeing about the weather and obsessing over tea – we drink 165 million cuppas a day, apparently*) then it’s a constant stream of facts and figures.

There’s no denying we’ve long been partial to a ‘Top 10’ this and a ‘Best Ever in the World’ that. If there’s something to be counted down in any semblance of order or perceived public preference – courtesy of one poll or (a zillion) others – then we’re on it faster than you can say “Did you know that in 2015…..” It’s an unarguable fact.

From discovering that British folk consume twice as many baked beans as any of our European partners** to marvelling at revelations we half-inch some 430,000 gallons of hotel-provided shampoo each year***, the UK populace is like a veritable fact sponge, readily immersing itself and subsequently soaking in a sea of stats at every conceivable opportunity.

But what about insurance stats? We know, it hardly sounds like a barrel of laughs, does it? However there’s some fascinating facts and figures out there which make for interesting reading and are largely difficult to ignore. If you’re privy to them in the first place that is.

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You see such data is traditionally thin on the ground, so we’ve had to go digging (as is our way) – and what we’ve unearthed goes a long way to prove beyond reasonable doubt that income protection insurance policies DO pay out; contrary to popular belief.

Indeed, there’s this long-standing urban myth about income protection insurance policies not paying out, or if they do, it’s like trying to get blood from the proverbial stone. And that if and when it is forthcoming the amount hardly covers the cost of a first class stamp.

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Well this is all hokum for a start, as great swathes of claimants have successfully received very useful sums of money from their income protection providers in recent years, while newbies will experience the same good fortune going forward.

And how do we know this for sure? Because the bastion of British insurance-y stuff told us, that’s right – it all comes direct from the Association of British Insurers (ABI).

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And lo and behold the ABI’s well-documented commitment to insurance industry transparency is clear for all to see, as you might expect. One of the first things you notice is the line which reads; ‘A very high percentage of protection insurance claims are paid’. No holds barred and essentially straight from the horse’s mouth. Although not venturing into precise details on specific insurance areas per se, the ABI typically groups all of the leading insurance protection products into the one melting pot and delivers an overview for all interested parties.

Either way it confirms that a sum of £3.44 billion (yes, that’s BILLION!) was paid out in insurance protection claims, reaching 128,500 customers or families in need as of 2014.

This impressive figure equates to £9.4 million being paid out EVERY DAY last year, seeking to financially assist 350 individuals and their close family to better cope in often life-changing (if not career-threatening) situations which have struck out of the blue.

For the record the ABI’s stats are comprised of data gathered from 90% of the protection insurance market here in the UK, and encapsulates individual policies such as life insurance, critical and terminal illness insurance, total permanent disability claims and of course the one we’re most concerned with here, income protection.

According to the ABI figures we have at our fingertips, UK income protection insurance policy providers received 14,293 claims from policyholders during 2014, of which said insurers settled 13,273 in total.

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This reveals that 92.9% of claims were successfully paid-out to insured parties, while conversely 1,020 claimants were declined, equating to 7.1%.

Reasons for this are neither afforded nor scrutinised at this juncture, suffice to say that the most common cause for knock-backs tends to be the failure to disclose correct data when originally applying for the income protection insurance product.

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Bear in mind, if you are ever in any doubt whatsoever as to what personal information should be declared from the outset and that which shouldn’t then it’s always prudent – and strongly advised – that the proposer reveal all and allow the insurance provider to be the judge.

Meanwhile the total value paid-out in income protection insurance claims for 2014 as a whole was said to be £134,012, with the average claim paid confirmed by the ABI’s database as £10,097.

Although worth noting that individual income protection plans might pay-out for a few months or alternatively consecutive years, ergo the figure quoted represents an average comprising of all new and on-going claims during the year in spotlight. For those of you looking for contrasts with what’s gone before, one glance at comparible 2013 results depicts an improved pay-out scenario once more, with an increase in success rates from the previous 96.6% of all claims in the protection insurance product fields to 97.7% for 2014.

In the bigger protection insurance picture income protection pay-out success rates compared relatively favourably alongside those falling into the total permanent disability insurance category (64.1%), however not quite so impressive when depicted against term life (98.7%, which saw insurers offering this product stumping up in excess of £1.5 billion) and whole of life (99.98%, witnessing £540 million in policy settlements over the 12 month period in question) covers.

Income protection insurers also successfully challenged 1.020 more claimants than any other protective insurance policy did, excepting those seeking recompense from their critical illness policy (1,251), yet paid out less average claim amounts (£10,097) than other protection insurance products did (total permanent disability (£73,241) and terminal illness (£98,506) being chief among those which habitually paid out more to successful claimants in 2014).

Subjecting the figures released by the ABI to further scrutiny and we soon establish that the average claim pay-out for successful income protection insurance policyholders (calculated at the £10,097 mentioned above) was distributed for an average of 204 weeks, or the equivalent of almost 4 years.

Oh, and did we mention that statistically people in Sheffield have the most filings and missing teeth?****

 

* according to statistics

** according to more statistics

*** according to more statistics than is healthy

**** according to statistics compiling further statistics

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Income protection insurance products

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