Insurers should ‘critically examine capital availability/solvency margin’, IRDAI says

Written by Adam Cadle

15/04/2020

Insurers’ boards in India should “critically examine their capital availability and solvency margin” in the context of COVID-19 pandemic, and “devise strategies to ensure that they have adequate capital and resources available with them”, the Insurance Regulatory and Development Authority of India (IRDAI) has said.

With the spread of COVID-19 in the country and 21-day nationwide lockdown from 25 March to 14 April and further extension of lockdown by several state governments, there is likely to be a significant impact across various sectors of the economy, the Authority said.

“Indian insurers need to prepare strategies and action plans for business continuity to ensure enhanced protection to the policyholders,” it stated. “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 the same.”

The Authority said it also is advising all insurers to align the dividend pay-out for the FY 2019-20 so as to be in conformity with the strategies around having adequate capital and resources available, and rationalise the expenses of management for the FY 2020-21.

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