95.1% of income protection claims in 2019 were paid out according to the Association of Financial Mutuals (AFM).

The firm’s research saw paid claims up from the 94.4% in 2018. Looking at 10 member organisations showed that £26m in claims were paid to nearly 7,500 policyholders in the year.  The average value of claims paid in 2019 was £3,473 with neurological and cancer claims being the most expensive. Average claim length was 15 weeks.

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The volume of claims also increased by 39% in just two years. This reflects the increase in demand for income protection from mutuals as well as continued efforts to make gaining claims easier.

In comparison, the Association of British Insurers’ industry data recorded 88.1% of income protection claims paid in 2018.

In the 4.9% rejected claims, 41% were as a result of non-disclosure, highlighting the need for customers and intermediaries to provide full information as early as possible.

Furthermore, 29% of those rejected claims were for an excluded condition or was outside the scope of the policy.

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Martin Shaw, Chief Executive of AFM, said: “The uncertainty caused by Covid-19 has made people more aware than ever before about the impact of being unwell and unable to work. These results are testament to AFM members’ commitment to paying claims whenever possible and demonstrate how they are working hard to make income protection accessible and easier to make a claim on.”

Main reasons for claims were:

  • Other general illnesses and injuries (24%);
  • Musculoskeletal problems (22%);
  • Accident/injury (20%);
  • Mental health (10%), and
  • Chest/nose/throat conditions (9%).

The data collected was from:

  • British Friendly
  • Circencester Friendly
  • DG Mutual
  • Exeter Mutual
  • Holloway Friendly
  • Metfriendly
  • PG Mutual
  • Shepherds Friendly
  • Transport Friendly
  • Wiltshire Friendly

British Friendly will no longer request medical evidence from an applicant based on age and benefit alone during Covid-19. This applies to pipeline clients and requirements will be cancelled as appropriate.

In addition, non-medical underwriting limits are the benefit level at which am insurer requests medical evidence for different age groups.