As a firm of advisers recommending insurance to business owners and individuals, it seems logical to write an article about the claims statistics behind the essential products we recommend on a daily basis. Here, we look at insurance claim results and demonstrate the immense value the UK protection market provides.
Insurance serves as a financial safety net in a world where uncertainties loom, offering support to those facing the challenges of bereavement, illness, and injury.
The latest figures released by the Association of British Insurers (ABI) and Group Risk Development reveal that a substantial £6.85 billion in insurance payouts were made in 2022, underscoring the crucial role of both group and individual protection policies.
Individual Policies Make a Significant Impact
Individual insurance policies played a pivotal role in providing assistance, with a total of 287,000 life insurance, income protection, and critical illness claims amounting to £4.64 billion. Notably, the average payout from these policies saw a consistent increase for the third consecutive year, rising from £14,931 to £15,448 (a 9% increase). Notably, small whole of life plans made up the bulk of these claims, reducing the average overall paid, compared to individual term plans with an average of £73,578 being paid.
Group Policies Offer Support Through Employers
Group policies, a means of protection provided by employers, contributed significantly to the overall support landscape. In 2022, these policies paid out £2.21 billion in claims, demonstrating the collective effort to safeguard employees during challenging times.
Rise in Individual Income Protection Claims
One notable trend in the report was the 9% increase in individual income protection claims, with over 15,900 people benefiting from these policies in 2022. The total value of claims also surged by 22%, amounting to £231 million. Musculoskeletal issues, particularly neck and back pain, were the primary reasons for these claims, constituting 34% of the cases for the second consecutive year.
Covid-Related Claims Experience a Sharp Decline
The impact of the ongoing global pandemic was evident in the report, with individual Covid claims plummeting by 64%, dropping from 10,606 in 2021 to 3,846 in 2022. These claims now represent only 1.3% of the total number of protection claims paid. The decline in Covid-related claims also led to a nearly 73% reduction in their total value, now standing at £71 million. The average payout for each Covid-related claim also fell by 29% to £17,434.
Consistent Claims Acceptance Rates
The report highlights the reliability of the insurance sector, with a consistent claims acceptance rate of around 98% since 2017. However, it's noteworthy that more than half of declined claims were attributed to customers not providing key details about themselves or their circumstances when taking out the policy.
In conclusion, the 2022 insurance payout figures underscore the vital role of insurance in providing financial support during challenging times. Whether through individual or group policies, the industry continues to play a crucial role in helping individuals, businesses and families navigate the uncertainties of life.
Breakdown of combined individual and group data
Products | New claims paid | Percentage new claims paid | Total value for all claims paid ** | Average value of claim paid** |
Critical Illness | 19,218 | 91.6% | £1,274,111,000 | £66,296 |
Life | 53,105 | 96.9% | £3,907,342,000 | £73,578 |
Total Permanent Disability | 342 | 70.3% | £24,061,000 | £70,414 |
Whole of Life | 213,064 | 99.99% | £863,752,000 | £4,054 |
Income Protection* | 22,542 | 84.4% | £778,564,000 | £21,913 |
All Protection Products | 308,270 | 97.5% | £6,847,830,000 | |
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*Includes figures from the Association of Financial Mutuals
**Figures are for both new claims and income protection claims in payment
Data Source ABI 01/06/2023
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