A record £6.8 billion was paid out in individual and group life insurance, income protection and critical illness claims in 2021, according to the Association of British Insurers (ABI) and Group Risk Development (GRiD).
Their figures show that these payouts equated to £18.6 million a day, an increase of £1.6 million a day more than 2020’s previous record.
This bumper increase in individual protection claims occurred despite a 1.6% drop in the total number of new claims paid.
The ABI and GRiD said this is due to more individual term assurance and critical illness claims, which have much higher values. The average claim payment for term assurance was £61,944 and £67,500 for critical illness, which is consistent with 2020.
This is also the third year in a row that the average individual payout has increased, and the average value for a claim is up 9% on 2020, to £14,994.
COVID-19 was a significant source of payouts, with related individual claims almost doubling in 2021 to £261 million, despite the number of claims paid remaining almost identical to 2020.
This was due to a 69% increase in term assurance claims, where the average payment was £69,760.
Continuing the trend of the last three years, 98% of both individual and group claims were paid in 2021. The main reason behind an individual protection claim being rejected was ‘non-disclosure’. This is when a customer doesn’t tell their insurer something at the outset that might have affected the insurer’s decision to provide cover and the price of that cover.
The number of individual income protection claims fell from 17,000 to 14,600.
This drop could have been for a number of reasons, including more people still being on the UK government’s furlough scheme and higher unemployment levels, according the ABI and GRiD.