According to data published by the Association of British Insurers (ABI) today, claims paid out to customers through life insurance and critical illness policies by the UK insurance industry continues to rise and was close to £2 billion in 2010.
A total of £1.9 billion was paid in life insurance and critical illness claims to 40,000 families and individuals, the report revealed.
Out of the total £1.9 billion payouts, life insurance claims totaled £1.14 billion while critical illness amounted to £776 million.
The average claim size was £47,166, almost twice the average UK annual salary.
The recent surge in successful settlements comes after the UK insurance industry took action following claims rejections hitting 16 per cent in 2007. It took steps to explain policies to customers so that fewer claims are turned down when people are experiencing stress, trauma or bereavement.
The ABI had introduced insurance claims guidelines in 2008 to ensure no claims are rejected as a result of customers making genuine mistakes to disclose important information.
Long-term protection complaints fell by 50 per cent following the ABI initiative, figures released by Financial Ombudsman Service (FOS) show.
“Critical illness and life insurance policies are crucial in helping people during some the most difficult times in their lives and can play a key part in the financial support needed to be able to pay off a mortgage, as well as provide dependants with some financial security in the event of your death,” said Maggie Craig, director of life and savings at ABI.
“The industry continues to work closely with its members to ensure that all claims are handled as quickly and as sensitively as possible, making a real difference to people’s lives at the most difficult of times. Insurers recognise that financial hardship can arise due to the lengthy legal process associated with sorting out a deceased person’s estate as well as coping with the effects of living with a serious long term health condition. Insurance companies want to pay valid claims as quickly as possible and continue to look at ways to reduce the number of unaccepted claims,” she added.