May 27, 2022
The protection industry pays out £6.8bn on 2021 claims

The protection industry pays out £6.8bn on 2021 claims

Figures released by the Association of British Insurers (ABI) show that the insurance industry paid out more than £6.8 billion in protection claims in 2021.  This is a year on year increase of 9%.

The average individual protection payout sum for critical illness, life insurance and income protection products increased to £14,994.

Covid 19

In 2021, payouts for Covid-19 related individual claims grew to £261 million. From a 69% increase in term assurance claims, where the average payment was £69,760. 

Life claims

  • For Total Permanent Disability claims, the ABI recorded 378 new claims being paid out, with an average value of  £74,209 per claim.
  • Whole of Life new claims reached 229,586, with the average payout valued at £4,125.
  • Individual term assurance claims were up from 2020, with the average claim payment for term assurance reaching £61,944.

Critical illness

  • Critical illness claims increased from 2020, with an average claim payment of £67,500.

Income protection claims

  • Individual income protection (IP) claims fell from 17,000 in 2020 to 14,600 in 2021. The ABI has attributed the drop to people still being on the Government’s furlough scheme. Coupled with higher unemployment levels. Insurers are also offering more and more additional benefits to ward off long term sickness such as:
  1. Physiotherapy
  2. Mental Health Support
  3. GP on demand
  4. Second medical opinion
  • Musculoskeletal condition-related claims rose to 5,012 in 2021. This was partly driven by policies with shorter deferred periods, as well as more people working from home.
  • As society became acclimatised to Covid-19 and new working models, claims for mental health decreased by almost 20% in 2021.  

Financial assistance

Roshani Hill, assistant director, head of protection and health at the Association of British Insurers, said: “Payouts for Covid-19 related claims almost doubling in 2021 is a stark reminder of the devastating impact the pandemic has had on society and people’s lives.”

“Although nothing will ease the distress of loss, protection insurance is there to reduce some of the financial risks and stresses that can accompany these difficult and unpredictable events,”

Source: Cover Magazine May 2022

For full claims information please click to go through to the ABI website.

Next steps

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