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New rules to boost insurance payouts

Insurance companies are expected to payout on more claims following an industry-wide acceptance of new rules.

The Association of British Insurers called the "pioneering" announcement that customers can only benefit.

The UK insurance companies announced that they will pay out on a greater number of claims for Critical Illness, Income Protection and life insurance where medical information was not disclosed, "unless the customer deliberately withheld it".

Companies will pay customers "a fair sum, reflecting risk and premiums paid".

In exceptional cases, "premiums will be refunded if the insurer would not have taken on the policy if they had known the full facts."

The new commitment will mean a further fall in the number of rejected claims and follows recent changes to policy application forms and clarity of communication to customers.

Commenting on the announcement, the ABI’s Director General, Stephen Haddrill, said: "Customers want to know that their insurance claim will always be assessed fairly and paid without fuss. The industry wants customers to be able to take out insurance with confidence. Today insurers have signed up to ensuring both of these happen. The number of protection claims that are turned down will fall."