Fall in protection complaints to FCA
The category, other decumulation, life and pensions, also saw a fall in the number of complaints made.
The number of complaints against life insurers and the proportion of complaints closed within eight weeks fell 6% to 90% with 40,192 closed within that time frame.
There was also an increase in the proportion of complaints upheld against life insurers to 48%, an increase of 3%.
Among decumulation, life and pensions providers The Prudential Assurance Company Limited received the most complaints (6,209), with Friends Life (5,188) and Aviva Life (4,153) coming second and third.
Consumers made a total of 2.18 million complaints to firms in the second half of 2014, 7% less than those made in the first half of the year. Payment protection insurance (PPI) made up 48% of this number with just over 1 million complaints. However, the total number of PPI complaints fell by 177,981.
Aside from PPI there was an increase in complaints of 1% mainly caused by an increase in complaints about banking and credit cards.
Christopher Woolard, director of strategy and competition at the FCA, said: “Today’s statistics offer a mixed picture. When you take PPI out of the equation, complaints are still on the up.
“So, while the overall decreases we have seen should be welcomed there is still more for financial services firms to do.
“The FCA’s challenge to those firms is to put the necessary measures in place to ensure we see a consistent fall across all sectors.”
A spokesperson for Friends Life said: “Friends Life is committed to providing quality service and propositions to customers.
“When we receive a complaint, we deal with it fairly and thoroughly and do our best to put it right for the customer.
“We will continue to work hard to meet the needs of our customers and reduce the number of complaints.
“The figures quoted by the FCA account for around 0.1% of our 5 million customers, however we will continue to work hard to reduce the number of complaints we receive.”
L&G: 60% of CI claims are cancer related
A total of 1,635 cancer-related claims were paid by the insurer, representing 59% of all claims. In 2013, 1,550 claims were related to cancer.
Breast cancer was by far the most prevalent form of cancer with 35% reporting a diagnosis. Bowel (8%) and skin (7%) the next most common.
The figures come as the insurer prepares to unite with cancer charities to support World Cancer Day on 4th February 2015.
Mark Holweger, managing director, intermediated, Legal & General Assurance Society, said: “Sadly as our stats show there is still much work to be done in the battle against cancer. It is for that reason we are fully behind World Cancer Day on 4th February 2014 as it attempts to raise awareness around this terrible illness.
“We work closely with organisations such as Macmillan Cancer Support to try and spread awareness of the impact it can have on people. According to Cancer Research UK one in two people will be diagnosed with the disease in their lifetime and sadly many more will be touched by it via family or friends.”
Russell Whitworth, underwriting and claims director, insurance at Legal & General, said: “We know the devastating impact that cancer has on people’s lives. Our aim is to pay as many claims as quickly as possible. With advances in medical science more people are surviving a critical illness but it also means that they will need some form of financial support to help them during their treatment, recovery and in some cases to help them live with their illness.
“Government, health organisations, charities, insurers and related industries must continue to raise public understanding of the disease and help give people accurate information and advice on how to reduce the risks of it developing. Great work is done through initiatives like World Cancer Day but we must not stop trying to reduce the impact cancer can have on all lives.”
Uinsure named preferred GI provider by Lighthouse
The arrangement means LMPS advisers will be able to source insurance products from Uinsure’s panel of insurers.
Advisers will also have access to Uinsure’s features including:
- A 5* Defaqto rated policy.
- Common policy wording across all insurers.
- Point-of-sale tool from Defaqto which independently validates the Uinsure product against the market and is free of charge.
- Quotes in 30 seconds from recognised insurance brands.
- Evidence of research supplied for compliance purposes to mitigate risks.
Flexible premium selection using ‘Price Beater’.
- A ‘Refer & Earn’ option which is tailored for those advisers who cannot find time or are reluctant to offer insurance advice themselves is also available.
Mark Hutchings, Uinsure’s national account manager, said: “We are delighted that LMPS has chosen Uinsure to be its preferred GI provider. We believe our proposition is the best in the market and our 5* Defaqto rated policy and totally free Defaqto point-of-sales tool help to give us the edge on our competitors. It is fantastic that LMPS has recognised this and we expect to really help advisers build effective trail incomes.”
National advice firm Lighthouse Group launched its holistic mortgage and protection advice service last week. It aimed to tackle the problem of mortgage loans being completed without appropriate cover, such as life insurance, critical illness or income protection.
Zurich pays 91% of critical illness claims
In total the insurer paid out over £191m on retail protection related claims including those for income protection and life policies.
Over half of claims were settled within 21 days with the quickest taking just two days to process.
This follows the launch of a major project in January last year resulting in 22 new initiatives to speed up claims for customers.
These include increased use of text and email to communicate with customers, dedicated claims specialists and direct credits to customer bank accounts.
Since the launch, claims turnaround times have been reduced by a quarter, Zurich said.
The average pay out for a critical illness claim over the period was £83,144 and the largest amounted to £1m.
Twenty claims were also paid out in respect of children’s illnesses, with average pay-outs here of £19,785 – highlighting an important and often overlooked benefit of these types of policies.
Cancer was again the most common reason for claims, accounting for 62%, followed by heart attack 12%, stroke 7% and multiple sclerosis 3%.
Where it was not possible to accept the claim, in 8% of cases the definition of the illness was not met, while 1% were declined because of non-disclosure of medical information.
Peter Hamilton, head of retail propositions at Zurich, said: “We have been reporting our critical illness statistics for over five years and are pleased to see payment rates consistently in excess of 90%. It’s important that we continue to challenge the misplaced perception amongst many that claims don’t get paid.
“Collectively, insurers will continue to be judged on claims paid, both the decision on the claim but also the experience. This is why we have invested in our claims systems and we will continue to look for ways to speed up the process of paying claims in any way we can. We know what a difference these payments make to our customers and ensuring they get the support they need as soon as possible is crucial.”
James Lindon-Travers, mortgage practice principal of Lindon-Travers Associates, said: “There is a great deal of scepticism out there around insurance claims in general, which is why it’s important providers publish these figures.
“I know first-hand the huge difference critical illness protection makes to our customers and we are delighted to see Zurich introducing so many new initiatives to further reduce payout times. Even if they don’t need to claim, the reassurance that it gives them is immeasurable.”
Affordability: So what is essential spend?
The FCA says it is discretionary spend and some lenders agree, while others consider that if you’ve paid the same amount for multiple years this is committed expenditure. So exactly what is essential spend?
This is a challenging area as what is considered as an essential expense and what’s discretionary alters from person to person. To an extent someone’s food bill has a level of discretion in it, if someone shops in a premium supermarket every week, they could no doubt lower their food bill by shopping in one of the continental ‘budget’ supermarkets instead – or buying less food. Some people would consider school fees an expenditure that they would waive if they hit hard times while others would consider them sacrosanct. The fact is that what is considered essential differs according to every person.
The pensions one is a fine balance; it is in the best interest for the community as a whole for everyone to have the best pension that they can afford. The advent of the auto-enrolment scheme this year illustrates what importance the government puts on increasing the level of pension savings, however surely there needs to be a level of common sense here? While auto enrolment amounts are obligatory, other people choose to top up their pension every month by a higher amount. It is this amount that could be considered discretionary by lenders.
The same applies to life assurance and critical illness payments. Most of the adviser community are committed to ensuring that their clients have the protection they need, but should someone be penalised in the mortgage stakes for this sensible decision?
Maybe one solution would be get a client to sign a document or waiver stating the amount that they would reduce their pension or life assurance by if they encountered a time when they couldn’t pay their mortgage. That way everyone would be assured that the whole pension would not need to be paused but it would enable someone to get the mortgage they need while also taking a sensible approach to their pension payments.
The more controversial alternative is that if somebody’s affordability is borderline that they purchase mortgage payment protection insurance at the time they take out the mortgage. As long as the policy is comprehensive it would pay out in the case of redundancy or illness and so should provide the lender with an element of reassurance.
No policy will cover every event, but there must be a level of commonsense here that most people, when faced with losing their house if they don’t pay their mortgage, would cut back on everything they can in order to keep their roof over their head.
Toni Smith is sales operations director at First Complete
ABI eyes fewer declined CI claims after updating guidelines
The ABI’s new Statement of Best Practice for CI insurance includes clarification of the difference between additional and partial payments and also brings the heart attack definition in line with clinical practice.
CI product providers have until December 2015 to adopt the new statement, which the ABI said was the result of extensive consultation and research into what customers need and where there have been problems in the past.
According to the ABI’s figures for 2013, the percentage of CI insurance claims being paid continues to rise, with 91.8% paid last year, up from 80% in 2005. But there were still more than 1,300 declined claims.
ABI head of protection Helen White said: “The updated [statement] will mean customers have a much clearer explanation of what their policy does and does not cover when they buy it and if they need to make a claim that it meets their expectations. This in turn should also lead to fewer declined claims.”
ABI Statement of Best Practice for Critical Illness Insurance
Registered deaths down 13% in 30 years
The decline was steeper for men, with a 15% reduction compared to a 10% decrease for females, however there have been increases in the number of deaths in the last couple of years.
The figures also revealed that the three largest groups of causes of death accounted for a smaller proportion of all deaths compared to 30 years ago.
The largest groups, circulatory diseases, cancers and respiratory diseases accounted for 71% of UK deaths in 2013 compared to 87% in 1983, although they accounted for eight of ten in England and Wales.
Cancer was the most common broad disease group in 2013, having overtaken circulatory diseases in 2010.
The majority of deaths registered were in the 80+ age group, with 46% of male deaths and 63% of female deaths being people over 80. In 1983, 59% died between the ages of 60-79.
The proportion of male deaths at age 80 or over had doubled from the 1983 figure, while it increased by less than a third for women.
Deaths below the age of 60 accounted for 14% of male deaths and 9% of female deaths in 2013.
Age standardised mortality rates now stand at 1,183 deaths per 100,000 men and 865 deaths per 100,000 women.
Scotland’s figures were the highest in the United Kingdom, 1,354 deaths per 100,000 for men and for women it was 1,005 per 100,000.
This is 195 more deaths per 100,000 than England for men and 159 more deaths per 100,000 than England for women, which has the lowest rate.
Longer lives ‘highlight the importance of financial planning’- LV=
The ONS data included information on how many years people would spend disabled as well as in a state of poor health.
Addy Frederick, media relations manager at LV, said: “The news that people are living longer in good health is welcome and serves to highlight the importance of financial planning.
“When it comes to protection, sales of life cover outstrip those of income protection, yet someone is more likely to be off work for more than two months than suffer a serious illness or die before they retire.
She continued:”With more and more people working beyond state retirement age, it is important that they have the relevant protection in place to meet their needs. It is also worth savers thinking about the length of time they may spend in retirement to ensure that they are saving enough to fund a comfortable lifestyle once they leave the workplace.
“However, it is vital that when someone approaches retirement they make the most of their pension fund by considering all the income options available.
“For those retirees who want a guaranteed income, certainty that they won’t outlive their pot and the potential for future growth, an investment-linked annuity may well be the right product for them, but we would always recommend that they shop around to find the solution or combination of solutions which offer them the flexibility they need.”
Protection complaints to FOS increasing
The numbers of enquiries and new cases about critical illness cover rose, although the number sent to the Ombudsman for a final decision fell.
For cases upheld in income protection the increase was 4% to an upheld rate of 38%, the number of enquiries to FOS have fallen.
Complaints upheld about Whole of Life (WOL) policies remained at 23% of those received, but the number of new cases which the Ombudsman was dealing with had increased.
WOL policies were the eighth largest area for enquiries, with 688 received by FOS, with 102 cases sent to the Ombudsman for a final decision.
Term assurance enquiries were down to 804 from 953 in the three month period, however, there was a 5% increase in the number of cases being upheld to 23%.
The protection industry remains a small part of the work FOS does, with 157,000 enquiries handled during the July-September quarter, 88,038 new cases and 12,125 complaints appealed to an ombudsman, the final stage.
Royal London changes hit protection as rebrand progresses
Royal London’s rebrand has already brought its asset management business into the new brand, whilst Scottish Life, Scottish Provident and Bright Grey will all join it in the next 18 months.
The company’s intermediary division (RLI) will be merged and a new head of protection proposition design has been brought in.
Debbie Kennedy will cover the Bright Grey and Scottish Provident brands, and companies joining Royal London later, She joins Royal London from Capita where she was involved in underwriting, claims and professional services.
Bright Grey offers products including life critical illness and income cover through financial advisers including the Helping Hand care advisory service.
Scottish Provident offers life cover, critical illness cover, income protection and unemployment cover as well as the Pegasus whole life plan.
The merger will combine all of the mutual group’s life, pensions and investments business under a new Royal London brand. The group’s wrap platform will retain the Ascentric brand.
The group life division currently serves around 5.3 million customers and employs over 2,900 people, whilst the group as a whole has funds under management of £77bn.
Isobel Langton, CEO of RLI, said: “Debbie is the perfect fit for RLI, bringing an enthusiastic blend of experience and fresh perspective to drive our growth ambition in the intermediated protection market.”