31 May 2017

Nearly a third of a billion paid in claims by Royal London

4 min read

 
Lorna Wiltshire

Lorna Wiltshire

Lorna Wiltshire, Corporate PR Manager

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Royal London published its 2016 claims statistics today.

97.3% of claims were paid totalling over £331m. Nearly £1m was paid in free cover claims – free cover is provided for up to 90 days while an application is being processed and will pay out on receipt of a valid claim before any premium has been collected from the customer. This can be useful if a customer is waiting for a mortgage to complete. In addition over 60% of all claims paid were fast-tracked and paid within three days.

Critical Illness

Critical illness (CI) claims accounted for over £156m of payments last year with an average payout of nearly £83,000. Once again the most common reason for claims was cancer (63%), followed by heart attack (10%), stroke (6%), multiple sclerosis (4%) and children’s critical illness (3%). 92.2% of CI claims were paid. 1.1% of claims were declined due to misrepresentation and 6.7% did not meet the policy definition. The average age of a CI claimant was 48 years old and the average policy had been in force for 10 years and 5 months. Almost £2.3m was paid in children’s CI claims.

Life insurance

96.8% of term life insurance claims were paid totalling nearly £108m and 90.9% of terminal illness claims were paid amounting to nearly £26m.

Whole of Life

Over £33m was paid in whole of life claims and 100% of claims received were paid.

Income protection

Royal London paid 95.6% of income protection claims totalling £3.6m based on new claims and those already in payment. Of the 4.4% of claims that weren’t paid, 2% were declined due to non-disclosure and 2.4% for claim definition not being met. As a member of the Association of British Insurers this is the first year we are also declaring claims based on the amount of new claims only, excluding claims in payment before 2016 that continued to be paid in 2016. On this basis, the value of claims paid in 2016 was nearly £1m and 83.8% of claims were paid. The top three reasons for IP claims were for cancer (29%) mental health conditions (26%) and musculoskeletal conditions (26%).

Debbie Kennedy, group head of protection strategy at Royal London said:

There has been much debate about whether providers should publish claims statistics. We firmly believe that it is the right thing to do to help the industry improve trust with customers. Insurance is an important part of financial planning and consumers need to believe that a claim will be paid and can provide a much-needed financial cushion when the worst happens.

“We are very focused on improving the whole claims experience – a good example of this is our fast- track process. In 2016 over 60% of claims were fast-tracked and on average these were paid within three days. Another example of where we’ve improved the experience is that in some circumstances, we can we can pay sums assured of up to £100,000 without the need to wait for probate. For larger claims where Probate is required, we have also signed the funeral pledge and will advance up to £10,000 to allow funeral arrangements to take place whilst the estate is being settled. In 2016, we stuck to our strategy of focusing on the most common reasons for claim by updating our definitions in these areas. By doing this, we are able to pay more claims for illnesses people are more likely to get. In times of crisis it’s important that our customers get the financial support they need as quickly and simply as possible.

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For further information please contact:

Lorna Wiltshire, Corporate PR Manager

Notes to Editors:

Free Cover

  • Starts as soon as a completed application form (paper or electronic) is received as long as:
    • the application form is complete;
    • the person covered is under age 60 (the oldest person covered if there are two), and
    • a completed direct debit instruction is included.

Income Protection claims

  • ABI members have changed the way IP claims are reported;
  • This is the first year we have included this method;
  • Using the new method, only new claims paid in 2016 are reported;
  • Claims in payment before 2016 that continued to be paid in 2016 are no longer included.

Fast track service

  • The Fast-track service is where we aim to pay a bereavement claim at point of notification (generally over the phone) providing the customer can provide enough information to satisfy our fast-track criteria and the claim value is under £10,000. On average fast-track claims are paid within three days of notification.

About Royal London:

Royal London is the largest mutual life, pensions and investment company in the UK, with funds under management of £117 billion, 8.8 million policies in force and 3,745 employees. Figures quoted are as at 30 June 2018.