Critical Illness Articles
Critical Illness Claim Payouts Improving, says ABI
Critical illness cover has been scrutinized in recent years due to poor payout rates and high number of excluded conditions. However, a new study reveals that the reality and reputation of critical illness claim payouts are changing.
In December of 2009, the Association of British Insurers (ABI) released news results of a critical illness claims study from 2008. Overall, the news is positive, stating that about 100 families are helped each day in the UK as a result of a critical illness claim payout.
Increase in Approved Claims
At the top of the list of data is the percentage of approved claims. Previously, data showed that 20% to 25% of all claims are denied or rejected. However, in 2008, only 7% of claims were rejected. That translates to a 93% approval rate for critical illness claims, and a 90% claim approval rate for all life and critical illness claims combined.
Members of the ABI said that about 45,000 critical illness claims were received in 2008. With a 93% approval rate, this is 41,900 claim approvals, compared to 3,100 rejections. The average claim payout was £52,000, which is about twice the average annual UK salary. The ABI stated that about £5.9 million is paid out every day in both critical illness and life claims.
Good News for Consumers and Advocate Groups
These figures are welcome news to consumer advocate groups who have been working with lawmakers and the ABI to improve claim acceptance rates with insurers. The ABI states that its members, consisting of about 90% of all insurers in the British market, honestly want to pay on all valid claims. Since 2005, the ABI has developed the ABI Code of Practice on CI Insurance. This Code has been widely accepted by insurance companies to reduce the number of claim rejections based on non-disclosure of medical information on a policyholder’s original application.
The ABI states that it continues to work with insurers to help reduce the number of claim rejections even further. Additionally, the ABI has been with the Law Commission to help turn principals of the Code into law.
In fact, a draft bill was introduced in December 2009 proposing to stop claim denials from the fact that a policyholder did not disclose previous medical information for which the insurer did not even ask. The proposed law suggests that insurers replace their current consumer duty of disclosure to a reasonable care to answer all medical history questions accurately.
Looking to the Future
The statistics published by the ABI have been well-received, and the organization plans to release claims data every year. However, consumer groups point out that although the 2008 claims information is insightful, more specific claims information for each insurance company would be more helpful for consumers. A breakdown of claims received, accepted, and denied would allow consumers to see just how well their future claim may fare for a specific insurance company.
 |
|