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
