Our response to claims stats accusations – Grid

Group Risk Development has co-ordinated industry efforts for reporting on percentages of new claims paid during 2013, with universal participation by all group risk insurers. Katharine Moxham, spokesperson for Grid, responds to some hard-hitting questions that have been asked of the sector.

Why has Grid decided to publish claims paid percentages?

Grid is supportive in principle to the publication of relevant claims data on insurance products and has voluntarily gathered collated pan-industry group risk claims data since 2011.

There has been no particular demand for the publication of group risk claims paid percentages from employers, advisers or the FCA but there is a clear trend for this in the individual market and we have published our own figures in advance of such demand.

Why has it taken so much longer for the group market to provide this information?

On the publication of 2012 claims data, Grid committed to publishing claims paid percentages for 2013.  It was important to establish an agreed benchmark and we worked with the industry over those 12 months in order to do this.  It has not therefore taken that long and our commitment to publishing this data has gone well beyond what the FCA mandates and is in the true spirit of transparency.

What are the main reasons for group risk claims being declined?

The claims payout rate for group life for 2013 was 99.6 per cent. With a less than 0.5 per cent decline rate, it is difficult to highlight any particular trend but reasons for decline were primarily as a result of eligibility anomalies (such as a claim being made outside of the  policy time limit).

The claims payout rate for new group income protection claims during 2013 was 82 per cent.  The main reason for turning down claims was due to the employee not meeting the definition of disability (e.g. still being capable of doing their own job, despite their illness or disability).

The claims payout rate for Group Critical Illness for 2013 was 81 per cent.  The main reasons for turning down claims were:

  • The employee’s condition not meeting the definition of the critical illness being claimed for (e.g. a type of dementia other than Alzheimer’s where only Alzheimer’s Disease is covered under the policy).
  • The claim was for an existing medical condition that was present at the time of taking out the cover (such conditions are generally excluded).

Why do your claims paid stats differ from those in the individual market? 

Both group and individual policies are well-regarded protection benefits. Many of the  benefits are similar but the basis of the contract fundamentally differs in terms of policy principles, pricing and how claims are processed. 

Group risk policies are commercial contracts which primarily support employers in meeting their contractual promises and legal obligations to their employees.  The employer chooses the cover so the employee can be somewhat distanced from the purchase.  This can mean that employees don’t always fully appreciate the policy terms – that’s why it’s vital to effectively communicate these benefits.

Our numbers are consistent, robust and represent universal participation by all Group Risk insurers.  Given that we have not had sight of the data gathered by the ABI to produce the aggregated stats from the Individual market, it would be imprudent to comment or speculate on these.

However, the GRiD Group Income Protection claims paid statistics are purely based on new claim assessments during 2013 whereas the ABI individual Income Protection statistics are based on the proportion of overall claims ceasing or declined (i.e. both existing and new claims).  Looking at the overall claims book would have the effect of improving the Group Income Protection claims paid percentage.

Why aren’t the stats available through an online comparison site?

To date, there has been no particular demand for the publication of group risk claims paid percentages from employers, advisers or the FCA.  GRiD has taken the initiative in producing industry stats in advance of such demand but can only report these on a collated basis.

What’s next?

GRiD will continue to build on its annual claims survey.  In addition to the claims that were either paid or declined, there were a material number of cases where a potential claim was notified and the employee then returned to work before a claim became payable, often with the support of the insurer or employer or both.  GRiD did not feel it was appropriate to include these cases in the calculations of percentages of claims paid and declined.

However, the next logical step would be to publish this detail and GRiD again expects to co-ordinate industry efforts to standardise protocols for reporting Group Income Protection Return to Work figures.

About GRiD Claims Data

Benefit No. of claims Value of claims paid Average claim amount % of new claims paid for 2013

Group Life

8,803

£876.8m

£99,603

99.6%

Group Income Protection[1]

14,501

£318.0m pa

£21,930 pa

82%

Group Critical Illness

798

£49.9m

£62,582

81%

Totals

24,102

£1,244.7m

The GRiD claims data survey was undertaken among its provider members and the figures are an accurate representation of the current group risk market in its entirety. Respondents provided figures for group life, group income protection and group critical illness claims for 2013.

On all claims paid figures, inadvertent “claims” arising for employees who were not actually members of the Group Risk scheme in question have been excluded from the statistics.

A link to the full press release is set out below.

GRID press release

About GRiD

Founded in 1998, Group Risk Development (GRiD) encourages awareness and uptake of corporate group protection benefits – income protection, group life insurance and critical illness cover – on behalf of its members which include insurers, reinsurers and intermediary businesses.

Under the chairmanship of David Cross, Head of Benefits, General Consulting, Towers Watson, GRiD aims to enhance the industry’s profile among media and stakeholder groups. The Group provides a collective voice to Government and participates in industry wide initiatives such as the qualification in Group Risk launched jointly with the Chartered Insurance Institute. In May 2009, the Group appointed its first dedicated spokesperson, Katharine Moxham, to provide expert media comment on a full range of group risk issues.

In July 2010, GRiD was named Organisation of the Year by the Protection Review.

www.grouprisk.org.uk


[1] The figures for Group Income Protection represent one year’s worth of benefit payment. Group Income Protection claims are often paid for several or many years so the ultimate value of these benefits will be much higher. In addition to claims paid or declined, there were a material number of cases where a potential claim was notified and the employee then returned to work before a claim became payable, often with the support of the insurer or Employer or both.