Mutual income protection providers see significant growth in 2023

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.”