STEADY RISE OF THE PAYMENT OF PROTECTION CLAIMS

The code clarifies the medical information the customers need to share with the insurers. The past year saw the protection insurers settling the claims of more than 129,100 customers or families. In total a whopping £ 3.6 bn was paid in individual protection claims, which work out around £10 m a day. Further divided among customers, it works out to around £28,000 per customers, for life insurance, critical illness insurance and income protection claims.

Breaking it down further, it has been calculated that the average individual income policy (IP), pay out was worth £ 40,000 and in 2015 91.2 % of the claims were paid out. This policy helps those who are unable to work due to illness and injury and lasted for more than 4 years. The percentage of claims for the critical insurance (CI) policy is consistently rising each year with 93.1% being paid. The average pay out in 2015 on these policies was £ 66,200.

While 97.2% of the protection covers were paid, the remaining 2.8% were declined claims either as the condition was not covered by the policy or the customer had not disclosed important information while buying the policy. According to the ABI, if one reason for the rise in the payment of claims is the introduction of the Code of Practice, the other could be the introduction of the standard definition for Total Permanent Disability (TPD) in its Critical Statement of Best practices in 2011. Before this there was no such demarcation and no standard definition of what qualified as 'total permanent disability'. This lack of clarity led to claims being made that did not qualify. The introduction of the Statement of Best practices has seen the consequent decline in the refused claims. This trend will continue as all new TDP policies are tested against the industry standards set by the ABI. The Total Permanent Disability claims averaged £ 65,200 with 66.4% of claims paid up from 64.1% in the previous year.

Yvonne Braun, director of Policy, Long-term Savings and Protection at the ABI, said: "Every single day, insurers pay out nearly £10m to support families through difficult times. Insurers want to make it as simple and easy as possible for people to claim, and it's great to see that 97% of these claims are paid."