Research by the Association of Financial Mutuals (AFM) into 10 member organisations that offer income protection products shows they paid out over £26 million in claims to nearly 7,500 policyholders in 2019.
On a like-for-like basis, the volume of claims paid across AFM members has increased by 39% in just two years. This reflects an increase in demand for income protection from mutuals, alongside continued efforts to make it easier for policyholders to make a claim.
The results mean 95.1% of claims received were paid in the year, which is yet another increase in the proportion of claims paid, up from 94.4% in 2019. By comparison, the Association of British Insurer’s industry data indicated 88.1% of all income protection claims were paid in 2018.
Of the 4.9% rejected claims, 41% were as a result of non-disclosure, highlighting the need for customers and intermediaries to provide full and frank information as early as possible. A further 29% of those rejected claims were where the claim was for an excluded condition or was outside the scope of the policy.
The 10 AFM members offering income protection are British Friendly; Cirencester Friendly; DG Mutual; Exeter Friendly; Holloway Friendly; Metfriendly; PG Mutual; Shepherds Friendly; Transport Friendly and Wiltshire Friendly.
Martin Shaw, chief executive of AFM, said: “The uncertainty caused by Covid-19 has made people more aware than ever before about the impact of being unwell and unable to work.
“These results are testament to AFM members’ commitment to paying claims whenever possible and demonstrate how they are working hard to make income protection accessible and easier to make a claim on.”