The Association of Financial Mutuals (AFM) members paid over £91.5m in income protection benefits, up from £70m in 2023.
AFM revealed that the average claim value was £29,948.
Musculoskeletal conditions remained the top reason for claims, making up 40% of new claims.
Other conditions made up 15%, while mental illness accounted for 11%.
Mental illness claims stayed at similar levels to 2023, higher than in 2022 and earlier.
Additionally, AFM found that there were 9420 new claims in 2024, with AFM members paying out 94.1% of these, compared to 92.1% the previous year.
Of the claims that were turned down, 52% were due to non-disclosure at application or claim, and 26% were because the claim related to an excluded condition or standard policy terms.
Data also showed that the average claim lasted 53 weeks, down from 68 weeks in 2023.
45% of claims had been paid for less than a year, but nearly a quarter were still being paid after five years.
AFM members also provided rehabilitation to 380 members.
Over 67,500 new policies were sold in 2024, valued at more than £40.8m.
AFM members made up nearly a quarter of the UK income protection market according to Association of British Insurers (ABI) data.
Andrew Whyte, chief executive of AFM, said: “Income protection is a valuable tool helping to build individuals’ financial resilience so that they can weather periods of uncertainty.
“With these products, AFM members provide peace of mind to policyholders with policies which meet their particular needs and at a price they can afford.”
“As the Government looks to boost the nation’s financial health and resilience, we expect income protection will be increasingly important.”
Whyte added: “And with AFM members playing a key and distinctive role, building the income protection market will also contribute to achieving the Government’s aspiration to double the size of the mutual sector.”
