IRDAI has done away with the ‘divident payout holiday’ considering the sharp recovery in the insurance sector post pandemic.
In April 2020, keeping in mind the impact of coronavirus pandemic on insurance business, IRDAI had urged insurance companies to observe ‘dividend payout holiday’ this fiscal.
In the circular, IRDAI said, “The insurance regulator has been assessing the economic position at global level and at the Indian contex in general and the insurance sector in particular. The situation has been assessed based on the financial results of insurers for the quarter ending September and December 2020. It is observed that the performance of insurers in terms of business is gradually reviving a bit at a slower pace vis-à-vis the pre-Covid level. Considering the revival phase of the economy in general and the insurance industry in particular and taking into account the solvency position of the insurance, it has been decided to withdraw the applicability of the circular dated April 24, 2020 with immediate effect. However insurers are requested to take a conscious call in the matter of declaring dividend for financial year 2020-2021 considering their capital solvency and liquidity positions.”
Most life insurance companies share their annual profit with policyholders and promoters in the form of dividend and bonus.