In an incredibly difficult year, it’s reassuring to see that protection policies have provided a financial lifeline to the vast majority of claimants.
Insurers claims statistics released so far this year report that somewhere in the region of 92% of critical illness claims and 96% of life insurance claims have been paid. This demonstrates that even when medical services are under intense pressure and getting medical evidence is more difficult, paying claims remains a priority.
Volumes of claims remain high. Aviva paid out over £1bn for the first time ever last year, supporting 50,000 families when they needed it most. L&G reported paying out £32m more in claims than this time last year, bringing their total pay-outs to £763m.
Both Aviva and L&G have received nearly £40m in claims as a result of Coronavirus, but the pandemic has clearly had other impacts too. NHS delays combined with a tendency for people to stay away from hospitals and GP surgeries has led to a reduction in referrals and therefore fewer diagnosed cancer cases. This will no doubt impact on the statistics over the coming year.
Mind the protection gap
The sheer volume of claims provides a stark reminder of the work there is to do to ensure that more people are able to claim if they need to.
Only 28% of UK adults currently have some form of personal protection insurance, according to recent research by Schroders Personal Wealth. However, Covid-19 does appear to have changed people’s attitudes towards it, with around 3 in 10 (29%) of those currently without a policy now more likely to consider protection.
Importantly, most protection policies don’t only provide the prospect of a pay out if the policyholder is unwell or dies during the policy term. Many policies now come with a wide range of “added value” benefits which have perhaps have not been valued very highly until now.
With most of us having stayed at home for much of the past year due to lockdown measures, and with huge pressures on the NHS, the value of these alternative ways to access services, such as mental health support, physiotherapy and even routine GP appointments will have grown substantially. Having easy access to medical helplines and remote treatment options will now carry a real resonance and value.
Weekend Essay: Putting protection back on the agenda
LV=, for example, has seen a 88% increase in the use of their remote GP services, a 235% increase in take up of their remote physiotherapy option and a massive 496% uplift in their remote psychological services. That not only reflects what a tough year it has been but also the massive benefit this type of facility can provide for policyholders, whether they claim or not.
The Exeter also saw a 112% year on year increase in the use of remote GPs and a 129% increase in the use of mental health support through their Healthwise programme. The friendly society reported a 115% increase in remote physiotherapy, providing help to those who otherwise may have faced considerable delays.
Simply having a life policy or income protection plan has meant many will have been able to access immediate help at no additional cost.
The claims statistics clearly underline the need for protection but as customer attitudes to other benefits alter, it’s also important advisers highlight the added value that their policy offers to customers, even if they are fortunate enough never to have to claim.
David Hollingworth is associate director at L&C Mortgages
There’s the old post-sale saw: And it I hope it turns out to be a complete waste of money. That aside, another old saw is that you can lead a horse to water but… How many sincere advisers have come up against that one?