Mutual income protection providers, members of the Association of Financial Mutuals (AFM), have demonstrated substantial growth in 2023, both in new business and in claims paid out, amounting to over £70m to 7,000 customers.
This figure marks an increase from £52m the previous year, with Wesleyan Assurance’s return to the AFM contributing to the rise. Excluding group business, these providers now handle around 60% of individual income protection claims, though they hold 15% of the policies.
Musculoskeletal claims continue to be the most common, constituting 38% of all claims, with a notable rise in mental health-related claims, which have increased to 11% in 2023. The link between this rise and the social and economic costs of mental health, now reported to be £300 billion, is becoming increasingly evident.
The claims process has also seen improvements, with the approval rate reaching 92.1%. Andrew Whyte, chief executive of AFM, reflected on the sector’s performance: “AFM members are becoming an increasingly important part of the market, managing around 400,000 policies at the end of 2023, just under 15% of the market, but they accounted for over 60% of all claims paid to individuals.”
The growth is attributed to affordable premiums and a higher likelihood of claim payments, drawing more customers to mutuals.
Whyte concluded with optimism for the future: “We expect the mutual influence to continue to grow: in 2023 ABI reported total sales of income protection of 247,000, with 57,000 new policies (or 22% of the total) sold by AFM members.”
