Not only can it be due to the depressing nature of critical illness and life insurance which causes reticence amongst many, some are doubtful that insurers will actually pay-out, especially after it was announced in 2007 that the level of rejected claims hit a 16 per cent high.

In response however, the Association of British Insurers (ABI) introduced a regulation on insurance claims to ensure anyone that made a genuine mistake when making an insurance application – through non-disclosure for instance -were not disregarded. Figures from the Financial Ombudsman Service suggest the regulation has had somewhat of a positive effect as the number of complaints has since reduced by half.

Since introducing this regulation, the ABI have also:

• Issued a statement of best practice to ensure insurers provide a better understanding of critical illness policies and exactly what they cover.
• Produced further support to reduce delays, meaning people receive their money sooner.

The ABI also recently announced that more than 40,000 individual cases were paid out an average of £47,166 in 2010. A sum of £1.14billion was paid out to 98.2 per cent of all claims through life insurance policies and £776million was paid out to 89.9 per cent of all claims through critical illness insurance policies. This resulted in a combined total of £1.9 billion.

These results do indicate that from 2009, the total value paid to critical illness claimants has fallen; but this is thought to be due to individual budget restrictions causing many people to cancel their policies.

Maggie Craig, ABI director of Life and Savings, recently re-iterated the importance of both critical illness and life insurance cover, stating that these “policies are crucial in helping people during some the most difficult times in their lives and can play a key part in the financial support needed to be able to pay off a mortgage, as well as provide dependents with some financial security in the event of death.”

She also went on to declare that the new guidance has meant “that all claims are handled as quickly and as sensitively as possible, making a real difference to people’s lives at the most difficult of times.”

These latest figures do suggest that we can re-establish some confidence within the insurance industry.  We should now feel safe in the knowledge that problems can be handled and any risks can be carefully managed.

 Welbeck Group can advise clients accordingly, please call us on 0207 776 2135 or e-mail marketing@welbeckgroup.co.uk

Currently, around 38 per cent of UK private sector employers provide a workplace pension scheme. However, the Government believes employers and employees need to keep up with the pension costs of longer life spans and make adequate provisions. The Government has announced that between late 2012 and early 2016, all employers will be required to auto-enroll their employees into a “qualifying workplace pension scheme”.

By October 2017, contributions to a pension scheme must be a minimum total of 8 per cent of the earnings of an employee. This will be made up of a 3 per cent minimum contribution from the employer, a 4 per cent contribution from the employee and a 1 per cent contribution from the Government – unless an employee decides to opt out – which would also eliminate the employer’s required contribution. Those who do opt out initially will be automatically enrolled every three years.

The ACA surveyed 468 employers and found that when the rules change, approximately 25 per cent of employers are planning to cut their employee pension contributions accordingly. This is in order to reduce the overall cost of their company pension schemes, meaning many existing pension contributors will see their employer contributions dramatically reduce, leaving them much worse off in retirement.

The survey also revealed that smaller employers are anticipating that between 35-40 per cent of their employees will opt out and are budgeting accordingly, whereas larger firms are anticipating an estimated 17 per cent of their work force will opt out. However, should many more employees wish to enroll in a pension scheme than the company had expected, this is likely to put company finances under increased pressure.

Conversley, many feel the Government should review their pension rules and make them cheaper for companies to run; this would also mean anyone already contributing towards a company pension will be less likely to be affected by their employer potentially “leveling-down” their contributions in order to save money.

In response however, The Department for Work and Pensions (DWP) stated “Automatic enrolment will give millions of people the opportunity to save into a pension with a contribution from their employer. Only one in three workers in the private sector is contributing to a workplace pension and our research indicates that 94 per cent of employers say they will maintain or increase their contribution levels. The reforms are being phased in gradually in order to help businesses adjust to the change and are introducing measures including a three-month waiting period to save companies approximately £170 million each year.”

The rules are still set to take place and this research highlights that many employers will have some big decisions to make in the next year. There is a vast amount of planning that needs to be done. 2012 looks set to be a very busy year indeed.

Welbeck Group can advise clients accordingly, please call us on 0207 776 2135 or e-mail marketing@welbeckgroup.co.uk to receive expert advice.

To talk to one of our experts call us on 0207 776 2135