British insurer Aviva plc said on Saturday it would compensate around 250 annuity customers who had been short-changed because of an error in its sales process.
The Telegraph newspaper reported on Saturday that Aviva had discovered staff had sold hundreds of customers inappropriate pensions in 2013.
Savers with medical conditions including diabetes, high blood pressure and smokers should have been offered an increased annuity - which provides an income for life - based on their lower life expectancy, the newspaper said.
In an emailed statement to Reuters, the company said it had identified the error in a routine review of customer policies and that 250 annuity customers were affected.
"As soon as we identified this we put measures in place to address the matter," the company said.
Aviva would ensure the customers affected would be "put in the same financial position as they should have been, had the error not occurred", it said in the statement.
"The amounts of redress are relatively small," it said.
The company said on Friday it had agreed terms for a possible deal to buy Friends Life for 5.6 billion pounds ($8.8 billion), after a government pensions shake-up this year has sharply cut the sale of annuities. The Financial Conduct Authority said in a review published in February that the annuities market was disorderly, with insurers maximising profits and failing to give the best deal. ($1 = 0.6388 British Pounds)
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