Insurers paid out a record £8bn in combined group and individual protection claims in 2024, although approval rates slipped across critical illness (CI) and income protection (IP) products.
That is the equivalent of £21.9m paid out to people experiencing bereavement, illness and injury every day and was up from the total of £7.34bn in 2023, according to the latest figures from the Association of British Insurers (ABI) and Group Risk Development (Grid).
Insurers paid out £5.32bn claims across individual life insurance, income protection and critical illness policies.
This was up 10% in the total value of individual claims paid compared to 2023, despite the number of individual claims in 2024 remaining steady at 275,000.
The average claim paid rose in value by 10% to £18,700 compared to £17,100 in 2023.
New claims paid drops
However, the percentage of new claims paid was down slightly across the board year-on-year with 96.9% of new claims paid in 2024, down from 97.4% the previous year.
It was a similar story across nearly all product segments with the percentage of new IP claims paid down to 80.0% from 81.3%, CI claims approved down to 89.7% from 90.5%, and total permanent disability cases approved down to 62.5% from 68.7%.
Life claims paid were largely unchanged at 96.5% from 96.7% as was whole of life where the new claims paid increased marginally to 99.99% from 99.98% the previous year.
Individual CI and IP pay outs up
The total value of critical illness claims climbed to £1.3bn, reflecting a 5% rise compared to 2023 and bringing the average claim paid to £67,600.
Cancer remained the most common reason for a critical illness pay out, representing 62% of all claims paid. Total pay outs for the condition also hit £812m, up over 4% from 2023.
Total pay outs for individual income protection claims rose 16% to £204m.
This was an increase of £28m compared to 2023, with the average claim pay out rising 6% year on year to £10,000.
Musculoskeletal issues such as neck and back pain stayed the leading cause for an individual IP claim in 2024, accounting for just over a third of claims paid (34%) and at least £32m in payments.
The proportion of all new individual claims paid has stayed at or above 97.9% over the last decade.
Common reasons for declined claims were policyholders failing to disclose existing medical conditions when they took out the policy, and not meeting the policy definitions.
Rebecca Ward, assistant director and head of health and protection at the ABI, said: “Behind every protection insurance claim is a person or someone close to them having to navigate a significant illness, injury or loss.
“The financial support these products can provide is a lifeline for those who need it, when they need it most.
“With nearly £22m paid in claims every day in 2024, protection insurers remain committed to helping people recover when faced with serious illness or grief.”
