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Data reflection for income protection

Providers have been promoting their critical illness claims statistics, with Aegon paying 91 per cent, Norwich Union paying 90 per cent and Scottish Provident paying 86.7 per cent of CI claims in 2008.

However, with providers being so willing to publish CI claims data, can we expect income protection statistics to be released in similar fashion?

Industry commentators have highlighted a mixed bag of issues around publishing IP claims, with some suggesting it is key to driving the market forward, and others saying it could cause unnecessary confusion for the consumer.

Bright Grey head of product proposition Ian Smart says while the increases in critical illness claims being paid is good news both for providers and policyholders, publishing IP statistics is not so simple.

He says: “The issues in making the reasons why IP claims are turned down understandable for the end consumer are much more complicated. There is much debate still to be had around how we make sure that everyone is reporting on the same basis to ensure consistency of what constitutes a declined claim.

“For example, if someone breaks a leg which stops them from working for three months but their plan has a six month deferred period, no benefit is payable. Does this constitute a declined claim just because the insurance company was contacted too early?”

Highclere Financial Services partner Alan Lakey agrees that the industry needs to agree on a format for publicising the statistics before such data is released.

However, Lifesearch senior policy advise Matt Morris says the reputation of CI cover continues to improve as a result of publishing claims data and there is no reason why this cannot be done for IP.

“Especially as two of the biggest players in the IP market, LV= and Pioneer, publish their stats already,” he says.
Watson Wyatt principal consultant Sue Elliott, a supporter of publishing IP stats, says work is already being done to find a simple and transparent way of publishing IP statistics, but there needs to be more consideration than CI data.

Elliott says there is more room for confusion when releasing IP data because there are not as many IP providers, IP claims are harder to adjudicate and deferred periods and satisfying the disability definitions differ.

For new providers who are yet to build up a reputable claims bank, however, publishing IP claims could leave them at an unfair disadvantage.

Pru Protect director of protection Kevin Carr says: “Typically most new providers take five to six years to build up enough claims to make the statistics worthwhile. But publishing such data builds trust and shows that the industry is open and honest.”

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