Aviva accepted 96% of claims worth £2.7 billion in 2016

Insurer Aviva paid £2.7 billion out in cash settlements and services to more than 775,000 UK customers claiming on their individual insurance policies.

The majority of claims—96%—were accepted across Aviva’s motor, home, travel, protection and health insurance policies in 2016.

Aviva said that the 4% of claims not settled last year “were due to reasons that are common across the industry”, including fraud, misunderstandings on the level of cover or nature of the policy, and failure to disclose important information when taking the policy out.

The insurer wants to dispel certain myths about insurance, after consumer research found that six out of 10 (60%) people believe that insurers only settle between 31% and 60% of claims. Aviva commissioned Censuswide to carry out the study of 2,003 adults aged over 18 in the UK.

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Rob Townend, UK claims director at Aviva, said: “There’s no such thing as an ‘average’ claim. Each claim has its own story—a human story—where our customers are relying on us for our help and expertise to put things right. This is why people buy insurance—to remove uncertainty from their lives. Helping our customers when they need it most is why we are here.”

“Where we haven’t paid a claim, we wanted to share the main reasons why, and what our customers can do about it. That’s why we have published our ratio of settled claims across a broad range of personal lines business, from health and general insurance to life and protection.”

Motor

Aviva settled more than 360,000 motor insurance claims last year, accepting 99.8% of claims, but the insurer did decline one in seven third-party whiplash claims for proven or suspected fraud.

Bogus claims for injury from third parties account for 59% of the total fraud that Aviva detects, and is worth £50 million, according to the insurer.

Around half (49%) of Aviva’s total motor claims bill goes to pay for personal injuries, 95% of which are for minor, short-term injuries, such as whiplash.

Repairing damage to the vehicle, both Aviva customers and the other party involved, accounts for a combined 45% of motor claims costs. Claims for theft, windscreen and fire account for a combined 6% of all motor claims that Aviva costs.

Home

Aviva accepted more than 93,000 home insurance claims last year, or 93.2% of claims received.

The most common reasons for declining claims were due to cover not extending to mechanical breakdown, wear and tear and garden fences, which are commonly excluded as they are highly susceptible to wind damage, particularly if they’re old or have been poorly installed.

Wear and tear is not typically covered by home insurance as cover is for unforeseen events, not for damage occurring over a period of time. Damp, for example, can cause major problems if left untreated and is not usually covered by home insurance, according to Aviva.

Improved awareness of what insurance does and doesn’t cover could prevent some of these claims that are declined. Aviva’s research found that half (50%) of consumers only check their policy’s terms and conditions when they come to claim.

The most common household claims relate to water leaks and accidental damage. Claims from burst pipes can easily exceed £10,000.

Travel

Aviva accepted 87.8% of travel insurance claims, amounting to nearly 107,000 claims last year.

Claims are most commonly declined due to cancellation, travel delay and failure to disclose an existing medical condition. While cancellation is covered, it only applies if the customer is unable to travel for reasons given in the policy, such as if they fall ill.

Individual protection

Aviva paid 98.9% of life and terminal illness claims last year to more than 15,500 beneficiaries, with just 1% of claims declined due to the customer not making accurate statements about their health and lifestyle when they applied for the policy, or the policy definition for a terminal diagnosis was not met.

The most common cause of claim was cancer, accounting for 63% of all claims. Of the 7.7% of claims that could not be paid, 1% was due to misrepresentation of important, relevant medical information and 6.5% were due to the condition not being covered by the policy.

Aviva accepted 92.6% of claims on income protection insurance last year, paying out more than £37 million in monthly benefit.

Of the proportion (7.4%) of claims that were declined or terminated, the leading reason was that the definition of disability was not met.

Health and group protection

Aviva paid £721 million to customers with private medical insurance (PMI) and group protection policies in 2016, while 94% of PMI claims and 95.4% of group protection claims were paid.

The most common conditions claimed for were musculoskeletal (29%), such as low back or knee pain. The leading condition in terms of cost of treatment was cancer, at 22% of all claims costs, with prostate and breast cancer being the most common cancer types.

The most common reason for a claim being declined was because the policy had an agreed excess that was greater than the cost of the claim.

In group protection, more than 7,000 customers benefited from life insurance, critical illness cover and income protection policies provided by their employer.

As many as nine in 10 employees (88%) who called Aviva for rehabilitation support or to make a claim in 2016 made a successful return to work, or were able to remain in work after intervention.

Townend concluded: “Insurers play a critical role in society, helping customers get back on their feet when they need it most. As our research shows, though, insurers have more work to do in building trust with our customers. That’s why we have published our settled claims data. Aviva settles the overwhelming majority of customer claims—24 out of every 25 we receive.”

“We recognise each claim as an opportunity to build that trust with our customers, and we will work tirelessly to look after our customers when they need us the most.”

“Insurance might not be the most exciting subject, but it often proves vital in protecting what really matters to us: our health and our homes, our possessions and our financial stability when the worst happens. At Aviva, we work hard to help our customers prevent these things from happening—and to fix them fast when they do.”

Mark Dugdale