Insurer Royal London pays out £8.5m for Covid deaths
INSURER Royal London has paid out £8.5m to the families of 1,200 Covid victims who were covered by its life insurance policies.
The mutual has pencilled in a further £10m in claims related to Covid-19 but warned there is still uncertainty over how many people the pandemic will ultimately kill.
Bosses also said that the wider health impacts are unknown from thousands of cancelled operations and medical check-ups during lockdown.
There are fears that patients with cancer or other serious health problems will suffer from slower treatment than normal as a result of the pandemic and may die earlier as a result.
Royal London swung to a £181m pretax loss in the first half of 2020 as the pandemic pummelled the value of its investments and hit returns on bonds, down from £393m profit a year earlier.
Insurers have large reserves to ensure they can pay out on claims. This money is invested in financial assets such as shares and bonds and in real assets such as property to make a return.
Royal London has £139bn of assets under management and is the largest of the remaining UK mutual insurers, owned by its 8 million policyholders.
New life insurance and pensions sales fell from £5.8bn in the first half of 2019 to £4.7bn this year as customers delayed major investment decisions.
The slump came despite a 15pc increase in sales of insurance products such as income protection, which pays out if workers fall ill and are unable to do their job.
Royal London is expected to complete the sale of its Ascentric platform, which has £14bn of assets under administration, to fund manager M&G by the end of 2020.