Aegon UK has paid out pays nearly £140m in individual protection claims in 2020, as critical illness claims fell 14 per cent while life claims rose 17 per cent.
But the insurer says that while the proportion of claims for cancer and heart-related deaths remained in line with its 2019 experience, the proportion of respiratory-related deaths doubled from 7 per cent in 2019.
Aegon says the fall in critical illness claims is in part down to people not wanting to burden the NHS and therefore not identifying conditions.
Aegon paid a total of £139.74m for more than 1,584 claims, amounting to 94 per cent of all individual protection claims received in 2020.
Aegon paid 96 per cent of all life claims, paying out £81.3m to 807 families and businesses,. Aegon saw a 17 per cent increase in the volume of life protection claims received in 2020 compared to 2019.
The average size of claim paid was £100,751 and the average age at claim was 63 years old.
Cancer continued to be the most common cause of death for a life claim, responsible for 40 per cent of claims, followed by heart-related conditions, the cause of 21 per cent and respiratory-related deaths, at 14 per cent.
Of the life claims Aegon was unable to pay in 2020 all 4 per cent were due to misrepresentation. Of the claims not paid due to misrepresentation, alcohol accounted for 31 per cent of the claims. The remaining 69 per cent were due to non-disclosure of respiratory issues, cardiac issues, cancer, diabetes or smoking.
Life policies also include terminal illness benefit, which means the policy will pay out on diagnosis of an illness, where life expectancy is 12 months or less. These claims are assessed separately from life protection claims.
Twenty one percent of life claims were paid early under Aegon’s terminal illness definition and Aegon paid 92 per cent of all terminal illness claims it received. In total, £23.3 million was paid for terminal illness claims in 2020, helping more than 205 individuals and their families put their finances in order before the insured person’s death.
Aegon saw a 14 per cent drop in the number of critical illness claims received in 2020 compared to 2019. Aegon paid 93 per cent of critical illness claims, which represented payments of £34.4 million.
Simon Jacobs, underwriting and claims director, Aegon said: “With more than 100,000 loved ones in the UK lost to the coronavirus, nothing could have demonstrated the importance of protection more than the events of the last year.
“An increase in life claims is expected during a global health crisis of this scale. But the impact of multiple lockdowns and the effect of people being mindful of burdening the NHS, is, we believe, the reason behind the drop in the volume of CI claims and it’s worrying. A delayed GP visit or a missed screening is going to have a negative impact on early detection and diagnosis of medical conditions, especially cancer.
“We can only hope that as the vaccine is rolled out and people start to resume a more normal way of life they will seek medical advice as soon as possible so they can get the treatment they need before any condition gets worse.
“While coronavirus might have contributed to some of the increase in life claims, it doesn’t account for it all. Of the life protection claims we received, coronavirus was shown on 12 per cent of death certificates as the cause of death. However, it’s possible that it could have been a contributing factor in a larger number of claims, even though it wasn’t mentioned on the death certificate.
“A number of the coronavirus claims Aegon received were for individuals with underlying health conditions such as cancer, diabetes and respiratory conditions – some of these, regardless of the pandemic, may have resulted in a claim.”
“The decrease in terminal illness claims is unlikely to be because there were fewer people becoming critically ill, but more likely because of the increased pressure on the NHS. The pandemic meant fewer routine screenings were carried out, such as mammograms and bowel investigations, which normally lead to a number of our cancer claims. Whether this will lead to a spike in claims this year as screenings and appointments begin to get back to normal remains to be seen.”
The average size of claim paid was £76,280 and the average age at claim was 51 years old.
Cancer, at 62 per cent of claims, continued to be the most common reason to claim, followed by heart attacks at 12 per cent and stroke at 6 per cent.
Of the critical illness claims Aegon was unable to pay in 2020, 3.5 per cent were due to the definition not being met and the remaining 3.1 per cent were due to misrepresentation.
Aegon’s income protection claims experience reveals that last year, 91 per cent of new claims received were paid, with £1.4m paid in regular monthly benefits. Volumes of income protection claims are low and the three-year average shows Aegon has paid 93 per cent of claims.
Cancer was the most common reason for income protection claims, representing 32 per cent of claims in 2020, closely followed by mental health, at 22 per cent.
Jacobs said: “We expected to see an increase in the number of income protection claims we received in 2020 – primarily around the mental health impacts of the pandemic and the potential long-term effects of having coronavirus (also known as long COVID). However, we only received two claims in relation to coronavirus. One reason could be the government’s extension of the furlough scheme potentially delaying claims. As this comes to an end later this year and we move to a new normal, we expect to see an increase in income protection claims. One positive impact of the lockdowns is that accidents and workplace injuries are likely to have reduced. Again, claims of this nature may increase as people return to workplaces and regular travel.”
