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Income protection stats should be made public

IP must take up the baton as CI paid claims figures improve

One insurer after another is publishing excellent critical illness paid claims statistics at present. Aviva and LV= are the latest to announce they are paying out well in excess of 90 per cent of all claims. The Mail on Sunday ran an opinion piece in February highlighting the major improvements the insurance industry has made in this area.

It has been a long hard road for a product that was widely berated in the consumer press until not that long ago as being the policy that would least likely pay out.

No doubt the work by insurers and the Association of British Insurers to cut back on non-disclosure, improve tele-underwriting and clarify illness definitions played a crucial role. So too did LifeSearch’s campaign several years ago to get all providers to publish their claims figures.

Transparency exposes the problem and forces people to find ways to fix it. Would we have enjoyed the recent boost in paid claims without that impetus? It is doubtful but that is a matter for conjecture.

Yet not all income protection providers publish their statistics. Many do – and boast excellent figures – but some do not.

The point of publishing claims statistics is not so that advisers can create a league table to compare insurer A and insurer B, especially when there is relatively little to choose between CI cover providers at present.

The point is to coerce those that lag behind to improve and to demonstrate to a doubting public that protection providers really do pay out when customers need it most.

Not publishing the numbers raises eyebrows. If the claims statistics are poor for a genuine reason, such as a new insurer having a relatively small claims book, that is fine. But it is better to be transparent about these things.

If protection insurance is to take up the huge slack left by the retreat of the welfare state, we have to make sure we are ready to meet that desperate need for cover from the unprotected public. That starts by making sure people have faith in the products we offer. The argument that the very nature of income protection makes calculating claims statistics difficult is a fair one. They are, after all, not one-off payments.

We should agree one way of doing it and stick to it. It is only a matter of time before IP payments come under scrutiny. I hope IP will stand up to this attention as is not just the industry but also the consumer that stands to be worse off if it does not.

Matt Morris is a senior policy adviser at LifeSearch


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There are 7 comments at the moment, we would love to hear your opinion too.

  1. One way to help new insurers out is to offer them a three year exemption from their launch date before they are asked to publish claims stats.

  2. Matthew Harman Smith 22nd March 2011 at 10:46 am

    Given that the majoity of Income protection cover in the UK is under group schemes (over 70%) and furthermore one insurer holds over 50% of the group income protection market statistics from that one insurer would provide a much needed start. However if that one insurer didn’t choose to share then this is a non starter.

  3. First we need clarity regarding what actually constitutes a declined claim.

    Is it a claim where the applicant failed to tell the truth?

    Is it a claim where the claim condition is not met?

    Is it a claim where the insured returns to work before the end of the deferred period?

    Is it a claim where the benefit is split over two deferred periods and the claimant receives part one but returns to work before part 2 kicks in.

    Once we have an accord then the figures will be more meaningful but let’s not forget that Friendly Society plans have, on average, a shorter deferment period due to their day one and week one options and this means that their claims experience may not be comparable with other insurers.

  4. Inappropriate measures, just like inappropriate targets, will give rise to inappropriate behaviours. Claims’ statistics are more in the inappropriate “bucket” than the “useful” bucket. The claimant with a rejected claim will take no more or no less comfort from the fact that their claim was rejected by a company that only rejects 1% or that rejects 10% of its claims. Fundamentally if a claimant or their representative, or indeed any whistleblower, has a belief that there is an insurer with a “Grisham-esq” policy to decline claims unfairly or unreasonably, then said person should be looking to voice these concerns to the firm itself and their CEO. If that doesn’t work then our industry has other relevant parties such as the FSA, FOS and the ABI.

  5. Anonymous, I have to disagree. Claims stats are useful in that it forces those who lag behind the market in paid claims to improve. I strongly believe that the only reason all the recent good work by the ABI and its members on killing non-disclosure in the CIC market has happened is because of the pressure claims publications created. We are now in a place where the CIC brand has been detoxified. If you don’t do these things proactively you lose the ability to set the agenda.

    If there’s no problem with IP paid claims stats then great, let’s see them and show everyone that it does what it says it does. It’s more improtant than ever for people to have IP as the welfare state retreats. But if there is an issue then lets tackle it now, transparently, because if we don’t, it’ll come back to bite us at the worst possible time.

    The only issue for me is not whether to publish stats, but how to define a declined claim. But that’s a small obsticle to work through.

  6. pete wildebeast 30th March 2011 at 9:27 am

    Do you really think critical illness has been detoxified? Certainly it has been cleaned up by removing most non-disclosure declines.

    But undoubtedly claims will still be turned down due to definitions not being met and Anne Robinson and Nicky Campbell will still make programmes about those claims.

  7. Rather than have stats provided by the Ins Cos I think that it would be far better for intermediaries to publish their claims stats acrosss all the providers that they use.

    I know of a very well known protection intermediary who is always in the press that have had a 100% decline rate due to fraud and non disclosure!

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