AFM statement on protection insurance and coronavirus

Income Protection for illness is insurance against losing earnings due to disability or “incapacity” for longer than the set time in your policy, often called the waiting period or deferred period. It only pays out to people who can’t work and aren’t getting paid by anyone because of the severity of the symptoms from illness (or accidental injury), causing “incapacity”. How bad that incapacity has to be differs depending on the specific definition the insurer states in your policy.

This type of Income Protection doesn’t cover you for other reasons stopping you working, like redundancy or having to self-isolate to protect others, nor usually even yourself.

This means that, even if you buy an income protection policy with no coronavirus / COVID-19 exclusion applying, it’s still very unlikely you would receive a pay-out related to the coronavirus, unless you were one of the rarer group under 70 who develops much more severe symptoms.

However, the position is less clear for people with medical conditions not in themselves preventing work, but because of which they are now receiving medical advice to self-isolate for at least 12 weeks for their own protection. This will very much depend on the terms and conditions of the particular policy and especially how ‘incapacity’ is defined.

Although your insurance may well not cover you for these unusual circumstances, fortunately, the Government is taking steps to achieve some replacement of income lost due to the enforced halt in work for many people.

Where you are entitled to such income replacement under a government scheme, this will generally mean you don’t need to claim under your policy anyway as you will not have suffered sufficient loss of income for your policy to be claimed upon. But if you still have a large shortfall compared to the ceiling amount you’re insured for, you should contact your income protection provider to find out if you can claim.

This statement is valid as of 31 March 2020

AFM’s CEO explores the likely impact of Brexit on the UK insurance industry

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AFM expresses concern over ombudsman levy increase

The Association of Financial Mutuals estimates that many firms will have to pay double their existing levy to the FOS going forward to effectively subsidise the fall-off in funding from big banks as the volume of PPI complaints continues to fall away. Read on in COVER

Recently, the Association of Financial Mutuals wrote to all the main political parties, to suggest policy options they might incorporate into their manifestos ahead of next month’s general election.

We are calling on the next Government to commit to actively supporting financial mutuals by:

  • Recognising the value to consumers of mutuals, by requiring legislators and Government departments to ensure rules are fit for purpose;
  • Removing barriers to the creation of new mutuals, and better enable existing mutuals to raise capital from new sources;
  • Embracing new opportunities for mutual insurers to support Government policy in healthcare, and in delivering a fairer and more resilient society.

We aim to publish response from the parties in incoming weeks as they announce their manifestos. To read more, read the manifesto document: Building a more self-reliant society.

Mutually Yours, October 2019

You can view the latest edition of Mutually Yours here

The Association of Financial Mutuals has appointed Jane Nelson, CEO of The Oddfellows, as its new Chair.

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Members of the Association of Financial Mutuals (AFM) saw both their income and general insurance premiums rise in 2018. 

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