Posted on Sep 07, 2011 by Sergio Ulloa
Aviva PLC, the United Kingdom's largest insurer with over 19 million customers, reported this week that it had so far paid out £212 million (US$ 341.28 million) on its critical illness and life insurance policies in the first half of 2011. This equates to a settlement on 98 percent of all claims made during that period.
Many British insurance providers are now publishing half year, as well as annual, claims statistics for their customers. Being able to report a high claims ratio can be seen as a valuable promotion tool for a company, demonstrating an ability to consistently meet obligations to clients. Both increased transparency and payouts will also work to improve the image of the insurance industry as a whole in the UK
. So far this year, Bright Grey, Scottish Provident and Zurich have published their claims statistics. Zurich have so far paid out 89 percent of critical illness claims (for a total of £43.7 million (US$67 million)) while Scottish Provident paid 91 percent and Bright Grey settled 90 percent of claims.
On critical illness policies, Aviva paid out £62 million (US$99.8 million) during the first six months of 2011, a 21 percent increase over last year's corresponding first half totals. The company disclosed that 755 customers had made claims on critical illness cover between January and June and that they received an average payment of around £81,000 each (US$130,000). The typical critical illness claimant was described as a 44 year-old women or a 45 and three months old man and the most commonly claimed-for diseases were cancer (accounting for 65.9 percent of all claims), followed at a distance by heart attack (11.3 percent) and stroke (7.9 percent).
Aviva reported that 92.5 percent of all critical illness claims were settled during the first half of the year, lifting the insurer's claims paid percentage over the past 12 months to a high of 94.3 percent. Of the remaining unsettled claims, Aviva's statistics show that around 6 percent were denied for failing meeting policy criteria. Meanwhile, the number of critical illness claims rejected for reasons of non-disclosure during the January-June period fell to 1.5 percent, a result the insurer described as significant.
With regards their life insurance policies, the first six months of 2011 saw Aviva pay out £150 million (US$241 million) worth of claims to the beneficiaries of policyholders who had died or had become diagnosed with a terminal condition. The company was able to settle 99.7 percent of all claims resulting from death, a stat Aviva understood to be "unsurpassed within the industry."
Robert Morrison, Chief Underwriter for Aviva, suggested that these claims totals should restore confidence amongst customers, assuring them that the company will continue to support them through difficult periods of their lives. The evidence shows that in fact the vast majority of claims are settled quickly and only a few turned down for reasons of non-disclosure or from not meeting with certain policy criteria. "At Aviva we believe it is crucial we pay every claim we can. While unfortunately across the industry there are a small number of claims insurers are unable to pay½these latest figures should help to reassure customers that we are there to help them when it matters most."
Mr. Morrison added that Aviva would remain committed to improving and developing new mechanisms to address critical illness claims. This month, the insurer introduced a new electronic group risk claims process designed to make it easier and more efficient for group risk customers to submit claims in the immediate aftermath of a policyholder death. Aviva also plan to add coverage extensions to its international private medical insurance
products to better meet the needs of their expanding base of international clients. The additions come as a result of a recent research paper, conducted by Aviva
, that revealed that over a third of all UK businesses worry about how they would manage if an employee was involved in an unforeseen accident while traveling abroad. "We would like to see critical illness claims figures rise even higher across the industry and at Aviva we are constantly reviewing how we work with our customers and advisers to assist them from the point of purchase. This way they can be confident that should the unexpected happen and they need to make a claim, we can help provide the financial support they require so they can concentrate on more important matters", Mr. Morrison concluded.
The number of successful critical illness claims in the United Kingdom is increasing as insurers succumb to increased public and regulatory pressure to settle as many policies as possible. New data published by the Association of British Insurers (ABI) this month has shown that £1.9 billion (US$3.06 billion) was paid out in 2010 by insurance companies to claimants, up from £1.8 billion (US$2.9 billion) the previous year, with £1.14 billion (US$1.84 billion) coming through life insurance and £776 million (US$1.2 billion) spent on critical illness claims. According to the ABI, More than 40,000 British families and individuals received a claim payment last year, with an average settlement of £47,166 (US$75,533)(almost double the average UK salary).
The British insurance industry has taken action to better inform and educate customers about the details of their policies so that fewer claims are turned down in the aftermath of a critical illness or bereavement. In 2008, the ABI issued a public guidance on insurance claims, which increased transparency and ensured customers who applied for life insurance would not be penalized for accidental non-disclosure of medical information. This occurred amid a public backlash after the proportion of rejected claims reached a high of 16 percent in 2007. The ABI soon began introducing standard definitions for many of the more common conditions on contentious critical illness policies. Since the guidelines have been implemented, customers have developed a deeper understanding of their policies, reducing the number of claims turned down, and thus the number of complaints leveled at long-term insurers in the UK has reportedly fallen by over 50 percent. Both the insurance companies and clients have realized the importance of improved transparency and efficient payouts when settling critical illness and life insurance policies.
Europe's fourth largest insurance company, with more than 300 years of experience in the global insurance industry, Aviva is committed to the safety and satisfaction of its customers. They sell a broad range of insurance products including motor and property insurance, protection and health insurance, business insurance, life insurance and pensions.
Association of British Insurers
The ABI (Association of British Insurers) represents the collective interests of the UK's insurance industry. The Association speaks out on issues of common interest; helps to inform and participate in debates on public policy issues; and also acts as an advocate for high standards of customer service in the insurance industry. Every day, ABI members pay out an estimated £155 million in benefits to pensioners and around £58 million in general insurance claims.