Mutual providers paid out £26m on income protection claims in 2019

Jessica Bird

April 27, 2020

income recovery protection

Mutual providers paid out on 19 of every 20 income protection claims in 2019, equating to £26m to nearly 7,500 policyholders, according to research by the Association of Financial Mutuals (AFM).

The volume of claims paid across AFM member organisations has increased by 39% on a like-for-like basis over the past two years.

This reflects an increase in demand for income protection for mutuals, alongside continued efforts to make it easier for policyholders to make a claim.

Some 95.1% of claims received were paid in the year, up from 94.4%.

By comparison, the Association of British Insurers’ (ABI) data indicated that 88.1% of all income protection claims were paid in 2018.

Of the 4.9% of rejected claims, 41% were as a result of non-disclosure, and a further 29% were due to an excluded condition or were outside the scope of the policy.

The main reasons for claims were found to be general illnesses and injuries (24%), musculoskeletal problems (22%), accident or injury (20%), mental health (10%), and chest, nose and throat conditions (9%).

Mental health has doubled as a reason for claims since 2017.

The average value of claims paid in 2019 was £3,473, and the average claim ran for 15 weeks.

Martin Shaw, chief executive of AFM, said: “The uncertainty caused by COVID-19 has made people more aware than ever before about the impact of being unwell and unable to work.

“These results are testament to AFM members’ commitment to paying claims whenever possible and demonstrate how they are working hard to make income protection accessible and easier to make a claim on.”

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