British life insurers paid £90m in claims for coronavirus deaths in the three months to the end of May, the Association of British Insurers (ABI) said today.
Insurers received 7,000 life insurance claims from families of people who died from covid-19 and 83 per cent have been paid so far, the ABI said. Every life insurance claim has been accepted, it said.
The average payout is expected to be £63,000 for an individual policy and £137,000 for a group policy.
Life insurers have been hit by the pandemic but their losses are seen as limited.
Although they are paying life insurance claims, worsening life expectancy will mean pensions, often the bulk of their business, are paid for a shorter period, industry sources say.
The ABI has said it expected its members to pay £1.2bn in pandemic-related claims this year, in sectors such as business interruption and event cancellation.
Industry sources say that figure could reach billions if the Financial Conduct Authority wins a test case against insurers over business interruption policy wordings. A decision is expected in mid-September.
Legal & General said last week its profit for the six months ended June fell two-thirds blaming the “unprecedented impact” of the pandemic.
L&G paid out £80m of extra claims due to the pandemic, but said the “tragically disproportionate” amount of deaths amongst older generations meant it saved £32m in retirement payments.
In May, insurance market Lloyd’s of London said it expected to pay out $3bn-to-$4.3bn (£2.5bn-to-£3.5bn) in claims stemming from the coronavirus pandemic.
This is on par with the September 11 attacks in 2001 and to the combined impacts of hurricanes Harvey, Irma and Maria in 2017.