Mutual income protection providers paid out over £50 million in claims in 2022
Mutual income protection providers paid out over £50 million in claims in 2022
April 2023
-Increases in the number of claims for aching joints, bones and muscles leads to higher claims payouts-
Members of the Association of Financial Mutuals (AFM) that offer income protection products paid out £52 million in claims in 2022, to over 9,000 customers.
This compares to £34 million in claims in 2021. Much of the increase reflects that LV= has since joined AFM and its results have expanded the value of claims paid:. Looking at the figures on a like-for-like basis, the amount paid out in 2022 is around 3% higher, whilst the number of claims fell 2%.
The most common form of claim was musculoskeletal (33% of all claims). Whilst these claims were also the most frequent in previous years, the rate of increase is significant, as demonstrated in the chart below.
In 2020, we speculated that the fall in musculoskeletal claims coincided with lockdown and the likelihood that people were spending less time travelling and at their desk; the rapid rise since indicates that this respite was temporary, and that changing lifestyles since the start of the pandemic, such as increased remote working and greater use of technology, have made us more vulnerable to problems with joints, bones and muscles.
Interestingly, the number of claims relating to mental health fell slightly, from 9% in 2021 to 8% in 2022. This is despite the HSE reporting that more than half of workplace-related ill-health cases are caused by stress, anxiety and depression[1], which reinforces the need for effective support for employees.
The vast majority of claims last a relatively short time (two-thirds last less than a year), but one in seven claims run for over five years. This illustrates the vital support that income protection can provide. Whilst the number of people who need to claim is modest, the benefits to those that do can be immeasurable. Families that would otherwise be forced to rely solely on State support, can maintain their standard of living during a protracted illness.
The proportion of claims approved was just under 92%, which was a little lower than the previous year (94%), but which still emphasises the commitment of the sector to pay all genuine claims. The main reasons for claims to be declined were those where key information was not disclosed at the point of application or claim (41%), and the claim had been made for an excluded condition or was outside the scope of the policy (39%).
Andrew Whyte, Chief Executive of AFM added:
“AFM members sold 50,000 new income protection policies in 2022. This, and increasing amounts paid out emphasise the growing importance people attach to ensuring their income is secured if they can’t work due to injury or illness. Whilst inflation and the cost of living remain high, having the capacity to pay the bills and look after the family finances has never been more important. Mutual income protection providers are at the forefront of paying claims and committed to providing the best possible service to their members.”