More good news for protection industry as Aviva pays out on 94.1% of CI claims in 2011

£114m in CI claims paid last year

The reputation of Britain’s protection insurance industry received another boost today when Aviva released an encouraging set of claims statistics for 2011.

After years of criticism from the personal finance consumer press for declining too many claims especially for critical illness (CI) insurance, news that one of the largest providers of the product paid out 94.1% of claims should prove encouraging for financial advisers and their clients.

Statistics released by Aviva show that it paid more than £439m to life insurance and CI customers in 2011, equating to more than £1.2m a day. This includes £320m paid to the families of life insurance customers who have died or been diagnosed with a terminal illness, and nearly £114m paid to customers with CI cover.

Aviva made payments for 10,495 life insurance claims and 1,568 CI claims in 2011. In total the insurer paid 99.7% of life insurance claims and 94.1% of CI claims.

The figures are broadly in line with other providers in the market, with most now having CI payout rates of over 90%. Last week AEGON said it paid out on 93% of CI claims in 2011, while Scottish Provident said it paid out in 91% of cases.

Overall, 0.4% of protection claims (life and critical illness) were declined due to non-disclosure. This breaks down as just 0.3% of life insurance claims, and 1% of CI claims.

However, while work carried out by the Association of British Insurers (ABI) to reduce the number of declined claims due to non-disclosure has helped to improve payout rates in recent years, across the market there is still a lack of publicly available detail on the exact nature of those payouts.

Few insurers, for example, publish details of the proportion of the percentage of paid claims which result in partial payments as opposed to customers receiving the “full” amount they expected to receive.

Aviva said today that the 94.1% claims paid figure for CI insurance includes a “very small” proportion of partial payments, although the “vast majority” are paid in full. It added that decisions on partial payments are arrived at in conjunction with the ABI Code of Practice for Claims Handling.

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