IRDAI urges insurers to take “conscious call” on dividend payouts owing to covid-19 pandemic

Mumbai: Insurance Regulatory and Development Authority of India (IRDAI) has directed insurance companies to manage financial resources prudentially in the view of fallout in business due to covid-19 pandemic.

Companies have been asked to “take a conscious call” and refrain from dividend payouts from profits for FY20. “…all insurers have been directed to align dividend pay-out for the FY 2019-20 so as to be in conformity with their strategies to ensure that they have adequate capital and resources available with them to ensure protection of the interests of the policyholders, IRDAI said in a circular released on Friday.

The regulator said that the conservative capital management position would be reexamined later based on the financial performance of insurance companies in quarter ending September 2020. Insurance sector, especially the life insurance companies, have been hit due financially due to lockdown in March where new policy issuances fell by over 60% against same period last year.


Furthermore, market meltdown and a falling G-sec rate could further impact the solvency metrics of some insurance companies if the situation worsens from here on.