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