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Critical claims climb as sales take a tumble

Claims on critical-illness policies grew 23 per cent last year as more people became aware of the benefits of protecting themselves against dread diseases, according to estimates by GE Frankona Re.

In its latest annual survey into trends in the critical-illness market, the reinsurer found that claims were on the increase despite a 4.3 per cent fall in overall sales. It says that in 2000 there were 785,734 new CI policies down from 820,000 the previous year.

GE Frankona believes part of the blame for the fall in sales is due to plummeting sales of mortgage endowment policies, many of which had CI components.

Although the survey does not provide exact figures to reflect the overall market, it estimates 70 per cent of all claims in 2000 were for a sum assured of £50,000 or lower. Claims for over £100,000 sum assured represented just 7 per cent of total claims.

The survey also found a widening gender gap, with more and more younger women under 40 making claims, with nearly half of all female claimants under 40, compared with 39 per cent of men under 40.

GE Frankona marketing analyst and co-author of the report Catherine Baxter says: “This is another exceptional year for critical-illness products. The contraction of the endowment market could have been expected to have a negative impact on critical-illness cover but these figures clearly show that people recognise the need for cover and are taking out policies to run alongside their mortgage.”

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