In 2022, members of the Association of Financial Mutuals (AFM) offering income protection products paid out £52m in claims to over 9,000 customers, up from £34m in 2021.
LV= joining AFM and expanding the value of claims paid accounted for much of the increase. On a like-for-like basis, the amount paid out in 2022 was about 3% higher, while the number of claims dropped 2%.
Musculoskeletal claims made up 33% of all claims, with the rate of increase being significant.
The number of mental health-related claims slightly decreased from 9% in 2021 to 8% in 2022, despite the HSE reporting that over half of workplace-related ill-health cases are due to stress, anxiety, and depression. This highlights the importance of effective support for employees.
Income protection claims can provide crucial support; two-thirds of claims last less than a year, but one in seven runs for over five years.
Although the number of people who need to claim is small, the benefits for those who do are invaluable.
Families can maintain their standard of living during extended illness, rather than relying solely on state support.
The proportion of approved claims was just under 92%, slightly lower than the previous year’s 94%, reflecting the sector’s commitment to pay all genuine claims.
Claims were mainly declined due to undisclosed key information at the point of application or claim (41%), and claims made for excluded conditions or outside the policy’s scope (39%).
Andrew Whyte, AFM’s chief executive, said: “AFM members sold 50,000 new income protection policies in 2022.
“This, and increasing amounts paid out, emphasise the growing importance people attach to ensuring their income is secured if they can’t work due to injury or illness.
“Mutual income protection providers are at the forefront of paying claims and committed to providing the best possible service to their members.”
