New figures from the Association of British Insurers (ABI) show over 100 families and individuals a day claiming on their life or critical illness insurance, during 2008.
According to the ABI, the average claim stood at £52,000 or double the average UK annual salary.
In addition, the number of critical illness claims paid out rose to 90% in 2008, compared with 80% in 2005, and for life term assurance, 97% of claims were paid last year.
The ABI believes its new Code of Practice has led to less claims being declined due to non-disclosure and says it is now working with its members to tackle the number of claims declined because they don’t meet the definition of “Total Permanent Disability”.
The ABI’s director general, Nick Starling, comments: “The insurance industry pays out £5.9 million every day in life and critical illness insurance claims, making a real difference to people’s lives at the most difficult of times.
He adds: “The new ABI code is making a dramatic improvement to the number of critical illness claims we pay.”
The ABI has also been working with the Law Commission which is reviewing an aspect of insurance contract law that has resulted in huge numbers of claims being rejected over the years.
Under the Marine Insurance Act 1906, the consumer has a duty of disclosure when completing an insurance proposal form.
Currently policyholders answer the questions asked by their insurance company but are expected to disclose any other facts that may be relevant to the insurer, without necessarily knowing what factors the insurer will take into account when accepting a risk.
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