Global regulators should not ban insurers from paying dividends as a result of COVID-19 and should give firms more time to report their capital positions, European insurers said on Monday.

The pandemic will likely lead to between $50 and $100 billion in losses for insurers, the Insurance Europe trade body said in response to a consultation by the International Association of Insurance Supervisors (IAIS) on the impact of the pandemic.

"A certain level of supervisory flexibility is … crucial to enable insurers to adapt their products and services to new market realities," Insurance Europe said.

Insurers also have a responsibility to their shareholders and "supervisors should refrain from imposing country or regional blanket bans on dividends," it added.

The EU's European Insurance and Occupational Pensions Authority (EIOPA) has told insurers it was "prudent" to suspend dividends as a result of the crisis.

The Bank of England has also told UK insurers to think hard before paying dividends given the uncertainties associated with COVID.

However, major insurers such as Allianz have continued to pay them. German financial regulator BaFin has also said a general payout ban is not necessary.

Insurers also need more time for financial reporting as they grapple with paying claims and developing new products, Insurance Europe said.

Insurers are facing legal action in several countries after they have said business interruption policies did not cover the pandemic. This had caused "reputational damage", Insurance Europe said.

The Solvency II EU capital rules for insurers exaggerate short-term market moves and "failed to provide sufficient protection for some insurers and created exaggerated changes in the solvency position of others" in the virus-triggered sell-off in March, Insurance Europe said.

However, insurers' capital positions remained well above regulatory minimum levels, it added.