Some income protection insurers have reported an increase in income protection claims in recent years.

Irish Life has recently produced a report outlining an increase in Income Protection claims by employees in the period 2014-2017. This increase in claims has been seen across the board and is not distinguished by factors such as age, gender, or company type.

The increase has been attributed to either people being ill longer term due to a reluctance to claim on income protection policies during the years following the 2008 economic downturn (meaning that shorter term illness have become more chronic), or a more general ageing of the workforce.

Increase in income protection claims

Psychological issues

There has been no single illness that has led to an increase in claims, although more recent claims figures from Irish life (2020) has suggested an upturn in claims as a result of mental health claims. 

Aviva has also noted an increase in claims as a result of psychological issues in 2023 with the proportion of income protection claims for psychological issues at 33% of claims. This represents an increase of 7% on such claims in 2022.

What does this mean for employers?

For employers, this increase in claims is concerning as it may lead to rate increases when the time comes to renew group income protection policies where your business has had claims on their group income protection policy.

Working with your income protection insurer

In order to avoid rate increases, employers may have to take a more active role in managing employee absences such as:

  • Have an employee absence management system, with employee absence promptly reported to HR.
  • Encourage employee engagement with an Occupational Health Physician.
  • Encourage staff to return to work through insurer rehabilitation and ‘back to work’ supports.
  • Offer flexibility to staff by providing individual solutions such as phased return to work and facilitating alternative work arrangements such as part time work, alternative duties etc. to encourage an earlier return to work.

Working with your group income protection claims handler remains the best way to support staff who are unable to work and need to make a claim on their employer’s policy.

Benefits of group income protection

Group income protection also remains a really important benefit in recruiting and retaining top staff for employers, having a happy and productive workforce, and providing a tax efficient way to manage unavoidable staff absenteeism.

What does this mean for personal income protection?

While the Irish Life research seems to focus on group income protection for employees, personal income protection policyholders may be concerned that this will affect their income protection cover.

Be reassured Irish Life has stated that they are committed to playing valid claims and that their assessment processes have not changed as a result of the increase in claims.

Aviva have also paid an average annual benefit of over €940 per week to income protection claimants in 2023, as well as increasing spending on rehabilitation for customers with claims to €250,000.

Safety net

Income protection remains a really important form of financial protection and the importance of income protection as a safety net to individuals and families at a stressful and challenging time is recognised by income protection insurers.

It is, as it always has been, essential to work with your income protection claims team and inform them where you may be out of work due to illness, injury, or disability as soon as you feel that you may need to take time off from work.

There are always claims that do not progress as the claimant has returned to work before the deferred period in their policy has elapsed but it can still make your claim run more smoothly if you inform your income protection insurer as soon as possible.

Fixed premiums

Personal income protection has always been available with guaranteed premiums, which are fixed for the term of the policy at the outset and fixed, or guaranteed premiums, are useful for financial planning so you will not face a rise in your premiums as the policy term goes on.

Conclusion

Although pent up demand for income protection following the economic downturn, as well as the demands on income protection cover due to an ageing population coupled with an emerging increase in mental health have all contributed to an upturn in income protection claims, income protection insurers remain committed to paying valid claims.

There has been no change in Irish Life assessment of claims processes according to the insurer, despite this increase in claims.

Aviva paid out €51 million in income protection claims in 2023.

Whether you are an employer, or you have a group or personal income protection policy, you can be reassured that an increase in claims will not lead to any reduction in your cover and, the advice remains that you work with your income protection insurer regarding claims or potential claims as soon as possible.

Specialist income protection advice

If you are considering purchasing an income protection policy, you are an employer considering group income protection, or you already have a personal or group income protection policy, getting specialised insurance advice is invaluable.

Our specialist income protection insurance advisors have experience with five income protection insurers currently operating in the Irish market and also specialise in job specific income protection.

Fill in our online assessment, or call us and our advisors can contact you for a free, no obligation consultation to advise you on whether you are eligible for income protection insurance and find you the most comprehensive and affordable cover for you.

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