Royal London saw a 15% rise in sales of income protection (IP), critical illness (CI) and life insurance cover in the first half of the year as more individuals sought finacial cover against sickness – but it faces a multimillion pound bill as it pays out benefits to families hit by the crisis.
The UK’s largest mutual insurer said it paid out £8.5m to the families of more than 1,200 customers who lost their lives as a result of COVID-19 and has set aside another £10m for potential future claims.
It warned in a statement: “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 no-COVID related medical treatments.”
The life and pensions provider fell to a loss overall in the first half of 2020 as the coronavirus pandemic hit investment returns and pulled bond yields lower.
The insurer made a pre-tax loss of £181m in the first six months of the year, compared to a profit of £397m in the same period in 2019. Sales of life insurance, CI and IP rose 15% to £407m.
Royal London Chief Executive Barry O’Dwyer 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, CI and IP.
“Pension sales were lower as a consequence of the disruption to advisers’ ability to do business during lockdown.”
Assets under management remained stable, though, at £139bn at the end of June.