Scottish Widows has published its delayed critical illness claims stats for 2011 showing it paid out 87 per cent of total claims, down from 90 per cent the year before.
All of the other major insurers published their claims stats between January and April but Scottish Widows delayed the release of its stats. At 87 per cent, Scottish Widows’ payout rate is the lowest of the major providers.
In June, Highclere Financial Services partner Alan Lakey hit out at ScotWids saying it was the only major critical-illness provider that refused to supply historical CI definitions and claim data to his comparison service CIExpert. While the provider has now published its claims statistics, it has not yet made a decision on whether to provide Lakey with its historical definitions.
Of the 13 per cent of claims which were denied, 4 per cent were because of non-disclosure and 9 per cent because the definition had not been met. This compares to 2 per cent of claims rejected for non-disclosure in 2010 and 8 per cent because the definition had not been met.
Scottish Widows paid out 97 per cent of life claims in 2011, down from 98 per cent the year before.
The provider says policies are likely to be declined for non-disclosure in the first couple of years of a policy. Therefore, it says, the 40 per cent increase in new policy sales it has experienced over the past two years has led to more claims being rejected. The provider wrote £492m worth of new policies in 2008, £574m in 2009 and £708m in 2011.
Scottish Widows head of protection Katya MacLean says: “Although the proportion of claims declined has risen slightly in 2011, this increase needs to be seen in the context of a 40 per cent increase in new protection premiums over the last two years.
“We know that claims declined for the reason of non disclosure tend to occur early in the life of a policy and therefore this increase is not unexpected given the growth in sales.”
The average age of Scottish Widow’s CI claimant is 46 years old for females and 48 years old for men. The average term of the policy at claim is 6 years and 2 months.
The three main reasons for claiming were cancer, at 61.5 per cent, heart related claims, at 18.7 per cent and strokes, at 8.5 per cent.
Lakey says: “Its decline rate puts them at the bottom of the table, compared to other insurers in the market. The 9 per cent decline rate for not meeting the claim definitions is also the highest in the industry. Bearing in mind these plans are sold by Lloyds branch advisers, primarily, it says to me they are not explaining to people what they are covered for.”