UK mutuals paid 94% of income protection claims in 2017

26 April 2018


New research from UK-based ICMIF member The Association of Financial Mutuals (AFM) shows that UK mutual providers are leading the way in paying claims.

“Our survey of nine income protection members of AFM showed that in 2017 they paid out on 93.7% of claims. That is significantly higher than the industry average, and clear evidence that policyholders can trust a mutual to support them in times of need,” said Martin Shaw, Chief Executive, AFM.

Research by the AFM into nine of its members* that offer income protection products shows that they paid out over GBP 22 million in claims to 4,950 policyholders in 2017. This represents 93.7% of claims received: by comparison in 2016 members of the Association of British Insurers (ABI) reported paying just 84.7% of income protection claims.

The research adopted the ‘ABI methodology’ for collecting claims data, which showed that musculoskeletal problems remain the key reason for claiming, and that mental illness now accounts for twice as many claims as cancer. The main reason for rejecting a claim was due to non-disclosure, either at application or during the claim.

Martin Shaw, Chief Executive of AFM added: “Recent research by the Protection Review indicated that almost half of people do not trust income protection insurers to pay claims. Our own survey shows that policyholders of mutual providers are being fairly treated, but that the industry needs to work harder on communicating the benefits of income protection.

“Many AFM members specialise in providing cover for the self-employed and for SMEs. In March, AFM submitted a response to the Work and Pensions Committee’s inquiry into Universal Credit, calling for legislative changes to avoid the risk that people taking responsibility for protecting their wages during ill-health do not lose state benefits as a result,” he concluded.

The Association of Financial Mutuals represents insurance and healthcare providers that are owned by their customers, or which are established to serve a defined community (on a not for profit basis). Between them, mutual insurers manage the savings, pensions, protection and healthcare needs of over 30 million people in the UK and Ireland; collect annual premium income of GBP 19.6 billion; and employ nearly 30,000 staff.

* The following organisations provided data for this research:

  • British Friendly
  • Cirencester
  • Friendly
  • Dentists’ Provident
  • DG Mutual
  • Exeter Friendly
  • Holloway Friendly
  • PG Mutual
  • Shepherds Friendly
  • Wiltshire Friendly

For member-only strategic content on the cooperative/mutual insurance sector, ICMIF members have exclusive access to a range of online resources through the ICMIF Knowledge Hub.

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