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article image77% of insurance customers don't know pay out rates

By Sam Wright     Jun 23, 2015 in Business
New research has highlighted a lack of consumer awareness is negatively impacting the insurance industry. As a result, thousands of UK inhabitants go without cover that will ultimately give them financial protection should anything go wrong.
Statistics published by Aegon UK revealed that 77 percent of consumers do not realise there is a strong pay out on protection policies. Industry leaders are now calling for companies to publish claim statistics in order to increase public awareness and build consumer confidence. Aegon, parent company of online pension tool Retiready, published claims data that shows a total of £113m in payments last year helped over 1200 of it insured members, whilst AIG Life announced pay outs of 90 percent and above across its range of financial products.
Lack of trust
The biggest barrier for insurance companies appears to be a lack of trust amongst the public. Despite delivering the highest number of payments ever in 2014, it seems consumers do not have confidence that insurance providers deliver on their promises.
However, the statistics prove otherwise. Life insurance payments last year was up to 99 percent while Income Protection was 90 percent. Yet only 19 percent of consumers trust insurers to pay when buying financial products.
The statistics show an increase of 7.8 percent in pay outs for life insurance, an average of £71,100 paid in critical illness cover and over £13.7m paid in CI and children’s CI claims.
Dougy Grant, Aegon’s Protection Director, says, “As an industry we need to pull together to make better use of claims statistics to help the sale and tackle fears that claims don’t pay out.”
Aegon UK do not stand alone with this viewpoint. Several other companies have urged the industry to start producing claims stats to encourage consumers to make sure they are financially protected.
And data published by ABI reveals that a low percentage of the British public are not prepared to take out policies for essential insurance plans such as income protection — less than 20 percent of UK workers are covered for redundancy.
The need for protection insurance
The principle consideration for consumers taking out insurance policies is price and product features. But a high percentage of the public in the UK do not even consider cover.
Most people recognise the importance of protection insurance and would prefer to be covered. But lack of trust is not the only issue. Many are deterred from taking out policies because of the additional monthly expense.
For example, consumers feel the cost for policies such as income protection is not worth the additional monthly spend, yet the number of pet insurance policies are on the rise for roughly the same cost.
The reluctance for workers to take out policies covering the cost of salary or illness is due to company sick pay and state benefits, despite these mirage-like safety nets meaning a financial loss.
Statistics consistently show that protection policies offer more value and peace of mind than the public realise. Insurance companies are therefore challenged to publish statistics which make them more transparent and help consumers make informed choices to buy financial products.
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