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Protection Report No. 8 (page7)

Insurer Claims information Are statistics available in consumer friendly format?
AXA* AXA entered the UK protection market in November 2004. N/A
BRIGHT GREY* Bright Grey entered the UK protection market in March 2003. N/A
BUPA INDIVIDUAL PROTECTION BUPA has paid out an average benefit of nearly £79,000 in critical illness claims since its inception. The average duration of the policy being in force was 33 months and its declined claims due to non disclosure were 8.4% of the claims received while 13.1% of claims did not meet the definition as described in the member’s handbook. Not Yet
FRIENDS PROVIDENT In 2005 Friends Provident paid out over £18m to 322 critical illness claimants. An additional 67 claims were declined for not disclosing significant medical information that was known to the applicant at outset and 38 claims did not meet the conditions of the policy. Not Yet
LEGAL & GENERAL For the first half of 2005 L&G paid 640 critical illness claims to the value of £37.8m, declined 129 claims for non-disclosure and 53 claims that did not meet the critical illness definitions, giving total claims declined of 22%. Not Yet
LIVERPOOL VICTORIA For 2002 - 2005 inclusive total claims paid of £18.5 million (2005 = £6.6m). Average payout = £71,000. Average age of claimant = 46. 23% declined (11% due to non-disclosure, 12% other). Average duration to claim = 23.5 months. Not Yet
NORWICH UNION Norwich Union paid over £65 million to critical illness claimants in 2004, an increase of £15 million more than the amount paid in 2003 (£49 million). A total of 924 claims were paid (74% of all claims received), with the average payment being over £70,000. Norwich Union was unable to meet 167 claims (13%) due to non-disclosure of medical information at policy outset. A further 164 claims (13%) were declined because the critical illness policy conditions were not met. Yes
PRUDENTIAL In 2005 Prudential received 487 claims. Accepted claims –269. Declined claims – 66. Claims still awaiting a decision – 152. Not Yet
ROYAL LIVER* Royal Liver entered the UK protection market in October 2004. N/A
SCOTTISH EQUITABLE (GUARDIAN) To end September 2005 90% of claims were paid out, totalling over £22 million. 10% of claims didn’t pay out – 27% due to non-disclosure, with the remainder not meeting policy definitions or having a policy exclusion applied. Yes
SCOTTISH EQUITABLE PROTECT To end September 2005 72% of claims were paid out, totalling over £21 million. 28% of claims didn’t pay out – 63% due to non-disclosure, with the remaining 36% not meeting policy definitions or having a policy exclusion applied. Yes
SCOTTISH PROVIDENT £392m paid since 1996. In 2005 the number of claims assesed was 1,489 of which 82.5% were successful, paying out to a value of £94m. There were 261 unsuccessful claims – 118 failing to meet critical illness definitions and 143 due to non-disclosure of information. Yes
SCOTTISH WIDOWS Scottish Widows paid out over £95 million in critical illness claims. During January 2000 and October 2005 2,929 claims were paid – averaging more than one every day. Of the claims received in the past 12 months 18% have been turned down. The two main reasons for claims being turned down are: - Non-disclosure of material information when the policy was taken out – 41% - The claim not meeting the policy definition – 58% Yes
SKANDIA More than £130m paid in critical illness claims. To 1 July 2005 1,323 claims paid. 79% paid, 21% not paid • 11% definition • 8% claim withdrawn by client • 2% non-disclosure Yes
STANDARD LIFE 16 November 2003 – 15 November 2004 Standard Life paid out £22.5 million on 442 claims. Over 88% of claims were on policies that had been in force for at least a year. Standard Life declined 20% of critical illness claims (88 out of 442). The two main reasons for decline – non-disclosure of medical information at application stage and for critical illness conditions not meeting policy definitions. 57% of declined critical illness cases were because the policy definitions were not met. 33% of declined critical illness cases were because of non-disclosure. Not Yet
(Correct as at April 2006)

 

As with all insurance, some claims clearly deserve to fail. But what is worrying about critical illness insurance is that many claims seem to fall into a grey area where, apparently, there are grounds for arguing the case either way. Mail on Sunday, March 2006. PPI claims ratios are estimated to be 15-20%, which is low compared to other general insurance products. For example, ratios for motor insurance were 74% and household insurance 55.2% in 2003. Around 6.5 to 7.5 million policies are taken out each year generating premium income estimated in 2003 at £5.4billion. Office of Fair Trading.

LifeSearch would encourage providers to continue updating statistics, either yearly or half-yearly and to continue to strive to ensure the statistics are presented in a consumer-friendly format. In addition, the industry needs to define when a claim is a claim. In other words, is it the point of initial client contact or is it when a claim form has been received?
* Insurers who have been in the critical illness market for less than 3-5 years may not yet have any meaningful statistics to publish.

 

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