Irdai removes curbs on dividend payout as insurers deliver better results

But, it has advised them to take a conscious call while declaring dividends for FY21, keeping in mind their capital position, solvency margin and liquidity position

The insurance regulator has withdrawn an April 2020 circular, which asked insurance companies to refrain from paying dividends from FY20 profits. The insurers can now declare dividend for the current financial year.

 

"Dividend can be declared from the recent profit or the current year's profit. That is their (insurers) call,” said an Irdai official.

 

"There is good growth in both general and life insurance companies. But, all companies are not alike. Some companies might have recovered but some might be still struggling,” he added.

 

The move comes as the business performance of insurers has been reviving gradually, said Irdai after assessing the financial results for Q2FY21 and Q3FY21.

 

It, however, asked insurers to take a conscious call while declaring dividends for FY21, keeping in mind their capital position, solvency margin, and liquidity position.

 

“Considering the revival phase of the economy in general and the insurance industry in particular, and taking into account the solv­ency position of the insurers, it has been decided to withdraw the applicability of the circular with immediate effect,” the regulator said.

 

“The authority has been assessing the economic position both at global level and Indian, in general and the insurance sector in particular. It is observed that the performance of the insurers in terms of business is gradually reviving, albeit at a slower pace vis-a-vis the pre-Covid levels,” it added.