Legal & General has revealed it paid out a record 46 personal protection claims every day in the UK during 2021, totalling £797.9 million – up £33.9 million on 2020 – and benefitting 16,890 customers and their families.
The life insurance provider added it paid out more than £3.5 billion in claims over the past five years across its life, critical illness cover (CIC), terminal illness cover (TIC) and income protection (IP).
Overall, the provider paid 97% of individual protection claims with an average pay out of £47,243.
Of claims that were not paid, almost nine in 10 were due to “deliberate or reckless misrepresentation”.
Over 30% of misrepresentations were due to lifestyle factors that the insurer said customers should clearly have known about, with the majority of these being linked to alcohol.
Legal & General said that it has continued to work closely with its partners and distributors to help minimise misrepresentation and do more to explain how insurance claims work so it can support more customers in 2022.
Impact of Covid-19
As with 2020, the pandemic affected 2021 claims data; with almost one in seven life claims related to Covid-19.
Legal & General paid out 1,579 Covid-19 life claims at an average of £46,769 per claim, resulting in a combined total of almost £74 million – over £34.6 million more than last year.
Comparing Covid-19 claims from men and women, 35% of life insurance claims came from women and 65% from men. This is line with Office for National Statistics indicating men are more likely to die from Covid-19 than women.
In contrast, 60% of Legal & General’s overall life insurance claims are for men, again indicating an increase when looking at Covid-19 claims specifically.
Role of income protection
Legal & General paid 417 IP claims in 2021, at a monthly average of £1,067 per claim, totalling over £3 million. The main cause of IP claims was musculoskeletal disorders (37%), followed by cancer (12.5%) and coronavirus (9.8%).
Project Smile
The year also saw the launch of Project Smile, an initiative to support children going through a difficult diagnosis. For every claim relating to a child’s illness paid, Legal & General sends a gift to the child to help bring a smile to their face. Gifts are chosen by the child and can range from a voucher to a Peppa Pig toy.
David Banks, director of claims and underwriting at Legal & General, said: “Paying claims is core to what we do. As we continue to come back from Covid-19, we remain focused on giving our customers and their loved ones financial support when they need it most. But more has to be done to tackle misrepresentation.
“At Legal & General we’re working closely with partners and distributors to help make the underwriting process as transparent and streamlined as possible. We hope that increasing knowledge around the lifestyle and general health information required will minimise misrepresentation and help us support even more customers in their moment of need.
“We’re proud to have paid out more than £797million in claims last year, but it’s the personal impact behind the figures that’s most important. We know an injury or illness affects the whole family, none more so than when it happens to a child. That’s why we have launched Project Smile. Our assessors get to know the families throughout the course of a claim – we wanted to go beyond just dealing with the paperwork and show that we are thinking of them through what is likely to be the most challenging time of their lives.”