New statistics released by the Association of British Insurers (ABI) paint a fascinating picture of how our needs in relation to protection insurance have evolved over the last few years.
The ‘headline’ finding was that a record £6.8 billion was paid out in group and individual life insurance, critical illness and income protection claims over the course of 2021 - the equivalent of £18.6 million a day, which was £1.6 million more a day than the previous record set in 2020.
The ABI stated that there had been a “bumper” rise in individual protection claims, despite a fall of 1.6% in the total number of new claims made; the trade association attributed this to a greater number of individual term assurance and critical illness claims, which have much higher values.
Sure enough, term assurance policies during 2021 had an average claim payment of £61,944, while for critical illness, the equivalent figure was £67,500, with these amounts being described by the ABI as “consistent with 2020”.
An increase in the average individual payout in 2021 means that this measure has now gone up for three consecutive years. The average claim value during the year was £14,994, which was 9% higher than 2020’s figure.
But what about the changing nature of our needs from protection cover?
As insightful as the above findings are, here at QuoteLifeCover, our heads were particularly turned by the data provided in relation to the types of claims made - and what this says about our evolving relationship with protection products such as income protection insurance.
The ABI said that there had been a 40% increase in claims for musculoskeletal conditions, for example. Individual income protection claims made in relation to these conditions reached 5,012 last year. This, in turn, raises the question of whether increased homeworking might have led to many people working in less-than-suitable working environments, and consequently suffering from back problems.
But on the other hand, while 2020 had seen a significant rise in mental health claims under individual income protection insurance, such claims plummeted by nearly 20% in 2021. They were still above 2019’s figure, however, which suggests that the adverse mental-health impacts of the COVID-19 crisis continued to reverberate through the pandemic’s ‘second year’.
And on the subject of COVID-19, payouts for individual claims related to the pandemic nearly doubled during the year, to £261 million, despite the number of claims barely changing from 2020’s figure. This was because of a 69% rise in term assurance claims - ‘term assurance’ being another name for term life insurance - with the average payment for this type of claim being £69,760.
The overall number of individual income protection insurance claims fell over the course of 2021, from 17,000 to 14,600. The ABI suggested a number of possible factors in this decrease, such as higher unemployment levels, a lot of people still being on the UK Government’s furlough scheme, and insurers prioritising ‘early intervention’ offerings, such as specialist support services, that might have decreased the likelihood of someone making a claim.
Whatever protection insurance you’re in the market for, QuoteLifeCover is available to help
Are you reading this as someone with an interest in purchasing a protection insurance product such as critical illness cover, life insurance, or income protection insurance, but are unsure what your next steps should be?
In that case, giving our no-obligation advice and quotation line a call could be an excellent such step to take. We are available for free on 0800 316 6917, and when you reach out to us, our UK adviser will discuss your situation and requirements, and help you make sense of the sometimes confusing and overwhelming world of protection cover, so that you can find only the very best solution.