Insurers paid out around £77 million a day in insurance claims, statistics released by the Association of British Insurers (ABI) show.
The UK has the largest insurance and long term savings industry in Europe and the third largest in the world. As well as paying out millions to consumers and businesses every day, the industry contributes £29 billion to UK GDP and pays £12 billion in tax.
In 2013, among the 27 million UK households:
• 20 million had contents cover
• 20 million had motor insurance
• 17 million had buildings cover
• 1.9 million had some form of private medical insurance policy
• 5.7 million had whole of life insurance
• 2.3 million had a personal pension
• 0.3 million had income protection.
The study also shows the pattern of payouts across different areas:
• £27 million went to repair vehicles and cover injury claims
• £13 million was paid to cover property claims by households and businesses
• £9 million went to helping people cope with unexpected financial difficulties through income protection, life insurance and critical illness cover
• private health insurance paid out £7 million.
The way that consumers purchase products differs for insurance and long term savings products. While 52% of motor insurance and 24% of property insurance are purchased directly or through a price comparison site by the consumer, 75% had advice when purchasing a pension or other long term insurance product.
Nigel Holland from Holland & Co Chartered Accountants said:
“ The insurance industry is enormous. Some forms of insurance are mandatory such as car insurance, public liability insurance, professional indemnity insurance for some professions, and house insurance for people who have mortgages. Other forms of insurance are optional.
Everyone should ensure they are insured when legislation forces them to do so. They should also carry out a risk assessment for other forms of insurance to see whether or not it is cost effective for them to implement insurance policies which are optional.
The factors which should be considered include the likelihood of a claim, the cost of the premium, the terms of the policy etc.
Very often people and businesses decide to effectively insure themselves when ever they are able to do so. This means taking on the risk of something going wrong and being prepared to pay any damages themselves rather than go through an insurance policy.
Another important consideration is that if the insurance claim is a sizable amount then there is more incentive for the insurance company to look at the fine print of the policy to see whether or not one of the terms has been breached this may enable the insurance company to avoid a costly claim.”