The insurance group Royal London has paid out £8.5m in life insurance claims to the families of more than 1,200 customers whose deaths were attributed to Covid-19 and is setting aside £10m for future claims.
Royal London is the UK’s largest mutual insurer, which means it is owned by its policyholders. It provides life, protection, pensions and savings policies to about 8 million people in the UK and Ireland.
While it has set aside £10m for future Covid-19 claims, the Royal London said there “remains uncertainty over the eventual impact of the pandemic including both future rates of mortality, as well as the wider health impacts from the deferral of non-Covid-19 related medical treatments”. Last week, Legal & General booked a £32m gain from increased mortality, as it expects to pay out pensions for fewer years than previously thought.
L&G paid out £36m in life insurance claims to the families of Covid-19 victims. Aviva also paid out £36m in claims and put aside £165m for future claims.
Royal London slumped to a pre-tax loss of £181m in the six months to 30 June because of lower investment returns, against a profit of £397m a year earlier. New business sales of life and pensions products were hit by the pandemic and the lockdowns imposed by the UK and Irish governments, falling 18% to £4.7bn from £5.8bn. Assets under management remained at £139bn.
Pension sales fell because of economic uncertainty, stock market volatility and the lockdowns, while workplace pension sales were hit as companies postponed decisions to move scheme providers. Individual pension sales fell 18% to £2.6bn while workplace pension sales were down 25% to £1.4bn.
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However, sales of life insurance, illness and income protection protection rose 15% to £407m as the coronavirus pandemic prompted more customers to seek financial protection.
Barry O’Dwyer, the chief executive, said: “New business sales for protection products grew by 15%, which was partly as a result of the pandemic reminding customers of the importance of life insurance, critical illness and income protection. Pension sales were lower as a consequence of the disruption to advisers’ ability to do business during lockdown.”
Royal London said it had started bringing back small numbers of key staff to the office, and more would follow in a phased return.