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Written by Scott Cadger, Head of Claims and Underwriting Strategy, Scottish Widows.

Providing peace of mind to clients

As COVID-19 continues to impact daily lives, client misconceptions may arise on how the pandemic affects taking out new life cover policies and making claims on existing policies. Therefore, it’s important that we as an industry offer clear and reassuring advice to customers and their families to dispel some of the myths surrounding protection during this time.

The need for cover

One of the biggest misconceptions about life insurance and critical illness cover we’ve seen at Scottish Widows is that people think they don’t need it.  Almost a quarter (22%) of UK adults don’t believe they need critical illness cover, either they’re too young to think about it or just that they are fit and healthy so don’t see protection as important at this time in their lives.

Our data shows that only 3% of adults between the ages of 18 and 44 think that they will be affected by a critical illness, however, the average age of a claimant is 51, and we do unfortunately receive a number of claims for people much younger. Indeed one of our claimants, Thomas, was only 29 when he was diagnosed with testicular cancer. Having Critical Illness Cover in place has helped him to be financially secure and allowed him to find a positive from a very negative experience. It is paramount that we encourage people to start thinking about cover earlier rather than later.

Furthermore, we know that many people don’t apply as they expect to be covered fully by state benefits in the unlikely event they fall ill. In fact, around one in five (20%) of the people we surveyed last year said that if they were to be taken seriously ill, they would be forced to rely on benefits. While many will likely have access to some form of financial help, unfortunately government benefits are often not enough to cover the daily cost of living and, as insurers, we must raise this as an important factor to consider.

Understanding what is covered

It’s not just age and health that are putting people off taking out insurance. We know that a lot of people aren’t sure what is and isn’t covered by a protection policy. 

Protection provided through employers is increasingly common, leading many to assume that they have access to these kinds of policies automatically through their workplace (like a workplace pension scheme). However, the reality is that over half (63%) of the working population have no financial protection of this kind, with many mistakenly expecting to be covered in the event of a crisis.

Confidence in the claims process

Finally, we know that a major barrier to people taking out protection is the idea that claims are rarely successful, with insurers avoiding paying out at any opportunity. Our research showed that the UK public believe less than half (44%) of critical illness claims are paid out each year with only 2% thinking between 91-100% of all claims are paid out. The reality is that across the industry last year, 98.3% of all financial protection claims were successful, which is the highest percentage of claims paid on record.*

Scottish Widows paid out over £212 million last year in critical illness and life insurance claims with 9,635 customers provided with financial reassurance during a challenging time. Where possible, it is important to reassure customers or prospective customers that this is the norm and insurers are there to honour that promise of cover.

At Scottish Widows, we have a multi-channel approach to claims.  We are looking at how we utilise alternative forms of evidence, be it electronic reports or virtual screenings. We will only look to request a GP report once we have exhausted all other types of evidence, whilst being really clear to customers that we are doing all we can to pay claims just as quickly as before.

To help our customers further, we have also added two new claim forms to our website to allow those who need to make a claim start the process online.  This means we can be informed of a claim at any time of day which can provide comfort that the process has started - one less thing for customers to think about.

Insurers should continue to be there to support their customers and to offer peace of mind during these uncertain times. From ensuring that existing customers are confident their policies remain valid at a time when they may have a higher propensity to claim, through to reassuring new applicants that their claims will be reviewed with proper care and attention, there’s a big job to be done in reassuring the public that insurance is continuing to work for them.

Find out more about our 2019 Claims Stats.

Read Thomas’ case study here.

*Source: ABI, May 2020

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