Zurich shares protection insurance claim rates for UK customers

• 97% of all protection claims paid
• 3% of protection claims declined
• Most declines due to customers withholding information about lifestyles such as smoking and alcohol consumption

Insurer Zurich today announces its protection claims paid statistics for 2019. Payments to customers with life, critical illness and income protection insurance amounted to over £287.6m, supporting families following bereavement or individuals through illness, or injury. The majority were paid smoothly (97%) with just 3% declined.

Life insurance

Most life insurance claims were paid (99%) amounting to over £203.9m, including one child bereavement claim. A minority were declined where, at application stage, customers did not share information about high alcohol consumption or a history of smoking, or where they had undergone treatment or investigations for a health problem.

For example, one customer applied for life insurance and died five months later.  However on their application, had not shared information about being hospitalised a month before taking out their policy, due to raised blood pressure. Another example included a customer who said that they had not been given information or advice about their alcohol intake, though medical evidence showed they had been advised to attend Alcoholics Anonymous and had alcohol related liver damage.

Critical Illness cover

Over 90% of critical illness claims were also paid last year, worth over £76.4m.  This included 8 claims for children, to the value of £189k and 21 partial claims worth over £422k where customers were diagnosed with less severe illnesses covered by their policies. A further 340 people benefited from payments of over £1.22m for claims for fracture cover – a policy add-on from Zurich’s latest product range launched in 2018.

The average age of critical illness claimants was 50 last year, with the most common reasons for claims being breast cancer (18%), heart attack (12%), prostate cancer and stroke (both 6%).   Benign brain tumour was the most common cause of children’s (21%) and partial claims (14%).

Ten per cent of critical illness claims were declined – of these, most (63%) were because the condition customers claimed for was not covered by their policy. One example included a claim for cancer where a medical consultant confirmed that the condition was benign and so did not meet the policy definition.

Over a third (36%) of these declines were because of misrepresentation on application forms. One customer made a claim for cancer on a policy that started in September 2018 though medical evidence showed that they were undergoing medical investigations before the policy started, which they hadn’t disclosed on their form. 

Interestingly, 189 critical illness claims were made by smokers last year, with all of these paid as customers had disclosed this information when they applied for cover.

Income Protection

The majority (98%) of income protection claims were paid with £7.2m worth of benefits issued to those unable to work through illness or injury. The average monthly sum paid was £1,534 with around 395 claims in payment per month. Just 2% were declined because of non-disclosure of medical information. For example, one claim for colon cancer was not paid because the customer did not disclose that they were undergoing tests for bowel problems before applying. Had the customer shared this information, cover would have been offered at the correct terms, taking into account any test results.

Cancer and neurological disorders were the most common causes of claims (both 18%) followed by musculoskeletal disorders (16%) and mental illness including anxiety, stress and depression (13%).

Where customers were unable to claim financial benefits because they returned to work before these would have started, many will have had advice and access to rehabilitation such as counselling or physiotherapy.

Extra support

As well as rehabilitation for many customers, over 8% accessed Zurich Support Services in 2019, an additional benefit offering professional counselling, consultation and resources on lifestyle issues. More than 60% of users accessed counselling services while the remainder sought support on matters such as will planning and probate, taxation, and eldercare.

Work continues on improving claim turnaround times such as through the use of text messaging and docusign (electronic signatures) to make the process quicker and easier for customers. Where docusign is being used for example, it is reducing processing time by up to a week. Nearly half of life insurance claims were settled within 20 working days while nearly a third of critical illness claims were settled within 25 working days.

Peter Hamilton, Head of Retail Protection at Zurich said: “We remain committed to sharing this information to show that all valid claims get paid, as well as reminding customers about the extra benefits they can access alongside the financial cover they have.

“Likewise, we’re keen to talk more about why a minority of claims are not and should not be paid.  The most common reason remains that customers withhold information at application stage that can in some cases invalidate a claim.  It is vital that we continue to work together as an industry, to educate on the need for full disclosure so that people benefit from the right level of cover, and most importantly, continue to benefit from the policies that they pay for.”