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Emma Simon: Publish claims stats or be damned


It is time for the insurance industry to be far more transparent about the claims it pays.

There have been moves to encourage health insurers to publish the proportion of claims declined on critical-illness and income protection policies. Many now do so. Meanwhile, legal changes have put the onus on the insurer to ask relevant questions, rather than on policyholders to recall every trip to the doctor.

At the time there was a lot of whingeing from the insurance industry but guess what? This transparency and clearer legal guidance have led to far more claims being paid.

Surprisingly, not all insurers publish these CI statistics. Some use the excuse that this is not
a major part of their business.

Can you see an investment company refusing to publish performance figures if only
a small portion of its business is in, say, US funds? Who would buy an investment fund if you could not see the manager’s track record? Surely the same principle should apply across the insurance industry.

The main yardstick for customers when choosing a policy is cost. Policy documents outline the extent of cover, any exclusions, maximum payouts and so on. But how many consumers wade through them?

When buying insurance, consumers are buying a promise. It would be useful to know how good a company is
at honouring it.

This is not to say that insurers should pay every claim. Some policyholders will have misunderstood what is covered or will deliberately exaggerate or falsify a claim. But the ratio of claims paid – as a percentage of premiums collected – should still be a useful guide. Not only would it help consumers to compare firms; it should give them an idea of which policy offers the best value for money.

Simply publishing these figures could lead to a better claims experience while giving insurers something else to focus on rather than slashing cover in order to compete on cost.

This course of action could be forced upon insurers sooner than they think. Recently the FCA said it was clamping down on add-on policies that often offer poor value. These include mobile phone insurance and GAP policies sold with cars. Companies selling these will now have to publish claims ratios, which show that just 10 per cent of premiums collected on GAP policies are paid out in claims, versus 64 per cent for car and home insurance.

The FCA should go further and force insurers to publish these for all products, as well as statistics on what proportion of claims they decline. Only then will consumers see whether the policies they are buying represent real value for money.

Emma Simon is a freelance journalist




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There are 3 comments at the moment, we would love to hear your opinion too.

  1. I’m all for claims statistics being published. I think it is a fundamental requirement for building consumer confidence, especially when research shows that the general public think far fewer plans pay out than is the reality, however, I think this is where it should stop.

    To require insurers to publish the percentage of premiums which are paid in claims does little to instill consumer confidence and could easily create a sense that insurers are profiteering from the public and their fears. I can imagine the headlines now…”Life Companies pay just 20% of premiums out in claims”. Hardly makes for a positive headline yet the figure is completely meaningless unless the costs of underwriting and administering those plans is also taken into account.

  2. Simon, I couldn’t disagree more in that insurance companies should not operate with full transparancy. If insurance companies do not wish to be seen to trade on peoples fears – they should not do it!
    An insured person takes a policy to safeguard against certain outcomes, not to fund life company executive ego salary or someone else’s investment returns.
    The whole system is intentionally complex to generate and hide profits and if TCF is to be properly applied, all life companies should be clear on what their objectives are and how much is charged in both claims and admin.
    I would happily pay more for insurance to a company who paid out a higher percentage in claims, the thinking being they are more likley to have better cover. I do not have the chance to consider these points at present. Also, excesses would have to be removed from the equation as part of a claims payment consideration as huge excesses are fast becoming another rip off strategy.
    When some insurances are compulsary, it is a disgrace the way certain groups, ie solicitors, CMC’s, insurance company exec’s and even the police have acted historically. This attitude should be stamped out across all insurance types ASAP for the greater good of all.

  3. Good article Emma.
    Don’t know whether or not you are aware that Universal Provident has recently published its third annual breakdown of declined PMI claims (and the reasons behind them). We are the only provider in the PMI market to do this.

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