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Aviva buys AIG Life for £460million - what does that mean for consumers and policyholders?

We look at how this might impact AIG Life existing customers and policyholders, plus what it means for the life insurance market in the UK

A photo of Dom Limberg, the author

By Dom Limberg

Published on: 25 September 2023

4 min read

Aviva to buy out AIG Life for £460million – what does it mean?

Some big news from the UK life insurance industry today, it has been announced that AIG Life has been bought out by Aviva PLC. for the sum of £460million. This comes as no real surprise to industry experts who have known about AIG Life being up for sale for several months, but it’s still a concern as another major provider exits the market.

Our main concern is, what does this mean for existing AIG Life customers and how will this affect the life insurance market in the future? The sale is expected to add 2.7million customers to Aviva’s already substantial customer base. This includes 1.3million individual protection policies and 1.4million group protection policies.

Is it a problem when insurance providers are bought out?

The announcement of the sale of AIG Life is the third high profile insurance business to sell this year, which is unprecedented in life insurance or general insurance markets in the UK. The range of insurance providers for British consumers is retracting which means less choice and fewer options.

Aegon was bought out by Royal London back in April, swiftly followed by Canada Life’s sale to Countrywide Assurance in May. Canada Life had already announced their departure to UK customers back in October last year.

There is definite concern in the industry surrounding a decreasing amount of choice for UK consumers. As insurers buy each other out, the range of choice for consumers becomes more limited. This means in the future you may end paying more than you would have with an insurer that now does not provide cover.

What has been said about Aviva buying AIG Life?

AIG is an international business and Aviva is only buying the UK branch, AIG Life UK. Aviva have arranged the sale with Corebridge Financial (a subsidiary of AIG).

Aviva is an insurance giant, and this is their latest move to expand their UK customer base. Aviva’s Chief Executive Amanda Blanc has said:

“It strengthens our prospects in the highly attractive UK protection market and continues our progress in repositioning the group towards capital-light growth.”

I’m an AIG customer, what should I do?

It can be worrying to learn that your life insurance provider has been bought out. Understandably, you might be left wondering what will happen to you and your policy.

The good news is that there will be protection in place for you. As with most insurance providers, AIG Life is covered by the Financial Services Compensation Scheme (FSCS).

This will usually only apply though if AIG cannot pay out on a policy claim, which shouldn’t be an issue as your cover will simply switch over to Aviva. You shouldn’t lose any of your benefits, policy terms and conditions should remain the same and pricing shouldn’t change.

At the end of the day, switching to Aviva was not your decision and it wouldn’t be fair for you to be negatively impacted by this move. You will also now be able to benefit from Aviva’s approach to insurance and potentially some of their customer benefits (though this is not yet confirmed).

You won’t need to do anything, and AIG Life UK should contact you soon (if they haven’t already) about what will happen next. If you want to contact AIG Life to ask any questions, the contact details are:

Tel. 0345 600 6820 

Will this affect Aviva customers?

Current Aviva customers should not be impacted by the merger with AIG Life. Ideally, there won’t be any effect on their policies, or the customer service received from Aviva. It makes sense to think of it as Aviva simply gaining new customers (though admittedly several million in one go).

What might happen next?

It’s hard to say if more insurers will be bought out – though hopefully this doesn’t happen. UK consumers have the right to a fair range of choice. It would be shame for the UK to move towards Australia’s structure for example, where they have a minimal number of insurance providers.

The fact is, certain providers are better for certain people and without a fair range of choice consumers may end paying much more than they would have previously. We’re hopeful that this announcement by Aviva will be the last major change to the UK insurance industry this year.

We always keep our eyes peeled for the latest updates and will update our MPO readers if any further developments occur. Check out our MPO news page for the latest updates about insurance and financial services in the UK.

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