Date: Tuesday 4th May 2021
The second quarter of each new year tends to spell the start of what I would call ‘claims season’ where the various different life companies release data about their previous year’s claims experience.
For me, this year feels different given the conditions we have all had to live through for the past 12 months. You only had to turn on the news on any given day last year to see an update regarding new covid infections and death rates.
I think you can get conditioned to seeing to that type of information because there’s just so much of it and it feels never ending.
But from a protection point of view, the regular news output has been like a training session for the general public, telling them that bad things are happening, and do happen every day. That’s probably got something to do with the fact many protection firms and advisers have done well during this past year or so.
But when it comes to what describing what we do for our clients, here’s the way I like to think of it: we can’t stop bad things from happening but we can put money on the table when our clients need it the most!
So how did we do as an industry?
It’s fair to say there is always room for improvement but upon reading the various press releases and communications from Aviva, it’s quite sobering.
In 2020, Aviva paid out over £1 billion in protection claims1…
Just think about that for a second… £1 billion is 1000 x £1million!
Those claim payments went to over 50,000 families and individuals who suffered a bereavement, critical or serious illness, or couldn’t work due to sickness or incapacity.
That is sobering. Bad things do happen and we can’t do anything about that, but we can make sure the finances are taken care of.
Another highlight from Aviva’s report was from all the claims they received, they actually paid out 98.2% of them.
That has to make you proud to work in this industry! What other type of insurance has consistently high claims figures like this?
I would expect similar high percentages of claims paid from the other big life offices when their results are released too so will we have to watch and wait.
I think another thing which struck me on the subject of claims is the commitment from various life offices with regards to Covid related claims.
Vitality issued a strong but simple statement to clarify the situation with them: “Should a member pass away as a result of Coronavirus, or complications from the virus, a claim will be paid, as per the terms of the life insurance plan”2
What is not particularly helpful for our industry is some of the mis-information floating around on social media with regards to protection policies and Covid Vaccines.
Are life companies adding clauses and exclusions to new contracts to prevent a claim from being made if the claim is related to Covid or as a result of taking a Covid Vaccine?
The Association of British Insurers – The ABI – (of which most mainstream life offices are members) put out a general statement in March 2021 to clarify the situation regarding vaccines. It said:
“There are some claims being made that having the Covid-19 vaccine will impact your life insurance cover. This is false. Receiving a vaccination against Covid will not impact your insurance cover, be it life insurance, private medical insurance or other forms of insurance”3
And the mainstream protection providers have each issued strong and clear statements to further consolidate their agreement to the ABI stance.
For example, LV= have an easy-to-follow Q&A section on their adviser site regarding Covid where they ask “If I have the Covid-19 vaccine, will this invalidate the life or protection insurance I have with LV=?”
Answer: “There will be no negative impact for any of our members if they have a Covid-19 vaccine as part of the UK vaccination programme.”4.That’s quite clear and unambiguous.
So, it looks like it’s going to be a significant and important year in terms of protection claims when all the figures are released. Early estimates suggest that total claims paid out will be several billion pounds.
So, during the worst pandemic of the modern era; did our industry step up and support people and families when they needed it the most or did life offices put barriers in the way to stop claims from happening?
There is a good news story here and its important the general public get to hear it.
Citation links:
2 https://www.vitality.co.uk/coronavirus-faqs/
3 https://www.abi.org.uk/products-and-issues/topics-and-issues/coronavirus-hub/life-insurance/
4 https://www.lv.com/coronavirus-update/life-insurance-and-related-products
