Members of the Association of Financial Mutuals (AFM) continue to build on their growth in the UK income protection market, according to a recent statement, adding more policies and paying out more claims than ever before.
In 2024, AFM members paid more than GBP 91.5 million in income protection benefits to their members, a significant increase from the GBP 70 million paid in 2023. The average value of claims paid across all providers was GBP 29,948.
The AFM noted that the most common reason for a claim continues to be musculoskeletal conditions, accounting for 40% of new claims. The next most common claim reason is ‘other’ conditions accounting for 15% of new claims.
Mental illness accounts for 11% of new claims, which is comparable to data from 2023. Although it has not increased further, mental illness claims have remained elevated above the levels reported in 2022 and earlier.
Of the 9420 new claims made during 2024, AFM said its members paid out 94.1%, also a notable increase from the 92.1% of claims paid in 2023. Of the claims denied, 52% were rejected due to a non-disclosure at the time of application or claim and 26% were rejected as the claim concerned an excluded condition or declinature under standard policy terms and conditions.
The average duration of claims in 2024 was 53 weeks, down from a 68-week average in 2023. Although 45% of claims had been in payment for less than a year, nearly a quarter remain in payment after five years, illustrating the significant capacity for income protection policies to provide financial assistance to members dealing with long-term illness. AFM members also provided rehabilitation to help 380 members recover.
The AFM says income protection business will continue to be a significant part of its members’ growth strategies, which have sold over 67,500 new policies during the year valued at more than GBP 40.8 million. Together, AFM member income protection sales make up nearly a quarter of the UK income protection market, according to aggregate data from the Association of British Insurers.
Andrew Whyte, Chief Executive of AFM commented: “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.”
He continued: “As the [UK] Government looks to boost the nation’s financial health and resilience, we expect income protection will be increasingly important. 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.”
