ABI issues guidance to speed up death claim payouts
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The Association of British Insurers has published guidance for insurers to reduce the time it takes to pay out on life insurance claims.
The trade body has developed the best practice guidance on the new claims process with the Law Commission.
The process works by asking the claimant to provide the insurer with evidence that they are the main beneficiary, such as a marriage certificate, mortgage deeds or birth certificate.
Claimants will also agree to pay back any money they receive from the policy if the legal process decides they were not entitled to receive the payout.
Research carried out by reinsurer RGA on behalf of the Investment & Life Assurance Group last year found that the average settlement time for death claims was 73 days.
The ABI says the new process could reduce the length of time it takes to pay out on death claims to just four weeks in straightforward cases.
The guidance has been designed to apply to new and existing policies, though will not apply where the circumstances of the death are suspicious or where the person’s estate is complicated.
ABI director general Otto Thoresen (pictured) says: “Dealing with bereavement is hard enough, without the added stress of worrying about money. This new life insurance claims process means the time it takes on average to receive a payout will drop from four months to just four weeks.
“We believe that this will go some way to alleviating financial hardship for a deceased person’s dependents, especially families on lower incomes who have few other assets available to rely on.”
Aviva has been piloting changes to its teleclaims process since January which allows it to settle life cover claims without sight of the death certificate in certain cases.
A report from the Investment & Life Assurance Group last July proposed various ways of cutting the time it takes to pay out on death claims, such as setting up policies in trust or nominating a beneficiary at application stage.
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