General Insurance Article - Zurich UK sees spike in life insurance payments

Insurer Zurich has paid out over £154.2m in life insurance claims during the first half of 2020 -providing support to over 3,200 customers and their families with life, critical illness and income protection policies. This includes claims from those affected by Covid-19, where payments to date amount to over £4.5m.

 The overall amount paid out to customers by the insurer has jumped by more than £14.2 million compared to the same period last year, with claims already paid for Covid-19 accounting for around a third of the increase. Many more claims are still being processed with over £10m more expected to be paid in the coming weeks.

 For life insurance, more than 2,100 claims were received during H1, with settlements worth over £108m. This compares to 1,980 claims over the same period last year valued at £97.2m. Over 99% were paid with just 1% declined where customers had not shared important medical information when they applied for cover, such as a history of excessive alcohol consumption.

 Critical illness payments
 For critical illness cover, £42.4m was paid out to 561 customers, with amounts also up on last year when 570 customers received payments of £38.6m. However new claims in June are noticeably lower by around a third on the same period last year, which may be due to customers being unable to access medical advice and treatment.

 Critical illness payments include £575k awarded in claims for children where the main cause of claims was Leukaemia. Over £150k was settled for customers with an ‘additional payments’ policy benefit. This is triggered where customers are diagnosed with less severe illnesses covered by their policies. Payments increased by over £65k on the same period last year, with all claimants female. Causes of claims included mastectomy for breast cancer and brain aneurysm.

 The main causes of critical illness claims are still cancer accounting for 62%, heart attack (9%), stroke (4%) and Multiple Sclerosis (3%), with breast cancer alone accounting for nearly one in five (19%).

 86% of claims made were paid with 7% declined for misrepresentation, this is where the customer hadn’t told us about previous medical history or lifestyle factors, for example we recently had to rescind a claim for Multiple Sclerosis where the customer hadn’t told us that she was having ongoing investigations immediately before applying for cover. Another 7% were declined as the definition/severity of the illness set out in their policy was not met. For example, a recent claim for stroke was declined, as the customer had not suffered any permanent neurological damage and all symptoms had been resolved.

 Income protection
 All new claims from customers with income protection cover were paid, with around 367 claims in payment each month valued at £3.3m. This compares to £3.7m paid last out year when 85% of new claims were accepted.
 The main causes of claims were musculoskeletal disorders for 29% of claimants, followed by mental illness (including anxiety, stress and depression) and cancers which both triggered more than one in five claims (21%).

 Fracture cover
 Over £456K was paid out to customers with ‘multiple fracture cover’, another policy add-on for those with life, critical illness and income protection policies. Injury causes ranged from a slip or a trip to a tackle on the football pitch. Most of these have no long-term effects, but customers have used the money to cover their bills if they’ve been unable to work for a few weeks, or, for example, for taxis if they’ve been unable to drive or use public transport.

 Peter Hamilton, Zurich’s Head of Retail Protection said: “Our claims data shows that we have seen a marked increase in the numbers of customers and their families needing to claim on their life insurance policies, with this jump driven in part by the Covid pandemic. This is exactly why we’re in business – to help customers and their families at the most difficult times in their lives. At the same time, we’ve seen fewer critical illness claims towards the end of the first half of this year - so we urge customers to seek medical advice to ensure they are accessing any treatment they may need.

 “We’re pleased to report that through this challenging time, our NPS* customer feedback has never been stronger. As well as working hard to make claims as smooth as possible, we’ve added flexibility to help those struggling financially. Our aim with this support is to help people maintain vital cover. We also encourage customers to continue using their policy benefits such as rehabilitation through their income protection cover and Zurich Support Services where they can access advice on health matters as well as professional counselling services.”

 Ian McKenna, founder of Protection Guru said: “Having excellent claims payment statistics is really important for any insurer but in many ways it is only half of the story. Consumers should receive an exceptional claims experience. Zurich’s exceptional performance in our recent Operational Ratings, where they achieve a higher score than any other life company and the joint highest rating for claims processes shows they deliver an outstanding proposition across the board.”

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