Mutual providers continued to strengthen their position in the UK income protection market during 2025, with new figures showing they accounted for almost a quarter of all policy sales while paying more than £91 million in claims.
New data from the Association of Financial Mutuals (AFM) shows its members paid more than £91 million in income protection benefits during 2025, matching the level paid in 2024 and rising from £70 million in 2023.
The average value of a successful claim reached £21,435, while 92.6% of the 8,337 new claims made during the year were paid. The average claim remained in payment for 66 weeks, up from 53 weeks in 2024, highlighting the longer-term support provided by income protection policies.
Musculoskeletal conditions remained the most common cause of claims, accounting for 33% of new claims, although this represented a fall from 40% in 2024. Other conditions accounted for 18% of new claims, while mental illness represented 9%, down slightly from 11% in each of the previous two years.
Among the claims declined, 49% were rejected because of non-disclosure when the policy was taken out or when the claim was made. A further 23% were declined because they related to excluded conditions or fell outside standard policy terms and conditions.
Although 43% of claims had been in payment for less than a year, almost a quarter continued for more than five years. AFM members also provided rehabilitation support to 231 policyholders during the year.
The report also showed continued growth in new business, with AFM members selling more than 72,000 income protection policies during 2025, an increase of almost 5,000 compared with 2024.
Total income protection sales were valued at £47.3 million. According to aggregate data from the ABI, AFM members continue to account for almost a quarter of the UK income protection market.
Andrew Whyte, chief executive of the Association of Financial Mutuals, said: “As consumers continue to weather volatile economic conditions and the continuing cost-of-living crisis, income protection products provide a valuable safety net to support individuals through unexpected injury or illness.”
“The government and regulators have recognised the ‘protection gap’ as a growing concern for the population’s financial resilience.
“AFM members are helping to bridge that gap by offering cost-effective products which meet the needs of consumers who are not well served by traditional financial institutions.”
