Money & Banking

IRDAI asks insurers to ensure sufficient capital and solvency

Surabhi Mumbai | Updated on April 14, 2020 Published on April 14, 2020

Directs companies to prepare strategies as Covid-19 impacts business

With the national lockdown impacting business and the economy, insurance regulator IRDAI has asked insurers to ensure that they have sufficient capital and liquidity to service the requirements of policyholders.

“Indian insurers need to prepare strategies and action plans for business continuity to ensure enhanced protection to the policyholders,” the Insurance Regulatory and Development Authority of India said in a circular.

It further said that due to the stress experienced by the economy, sufficiency of capital and liquidity position of the insurers may be adversely impacted and all the insurers need to guard against it. “Boards of insurers are advised to critically examine their capital availability and solvency margin as required in the current financial year 2020-21 and devise strategies to ensure that they have adequate capital and resources available with them,” it added.

It has also advised them to align the dividend payout for FY20 with this goal in mind and also rationalise expenses for the current fiscal. “All insurers are advised to place this communication before their respective boards at the ensuing meeting,” IRDAI said.

Amid the pandemic and lockdown, IRDAI has already announced several relaxations to ease disruptions in the activities of the insurance industry.

It stressed that insurers must ensure that they protect the interests of policyholders and provide financial security to them.

Published on April 14, 2020

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