Some firms said they would resist such a move and Germany indicated its opposition.
Dutch insurers NN Group and Aegon slumped around 10% while France's CNP Assurances fell 7% and AXA was down 4%. British insurers - which still need to follow EU insurance regulation during the Brexit transition period - also fell, with Aviva and Prudential down 4%.
The European Insurance and Occupational Pensions Authority (EIOPA) said late on Thursday the temporary suspensions were essential to ensure insurers and reinsurers held a "robust" level of reserves to protect policyholders and absorb potential losses.
Last week, the European Central Bank told lenders to halt shareholder payouts. But while most major banks in the euro zone have heeded calls to suspend their dividends, insurers may put up more of a battle.
Germany's financial regulator BaFin said on Friday that a general payout ban for insurers and pension funds was currently not necessary.
Germany-based Allianz, the region's biggest insurer, told Reuters it was in "good shape" and wanted to maintain both its dividend for 2019 and a share buyback worth 1.5 billion euros.
German reinsurer Munich Re MUVGn.DE, which declined to comment on the EIOPA statement, said on Tuesday it was scrapping a share buyback but keeping a 9.8 euros per share dividend, despite a profit warning.
The suspensions should be reviewed as the financial and economic impact of COVID-19 starts to become clearer, the watchdog added.
Its statement was similar to a letter from Bank of England Deputy Governor Sam Woods on Tuesday to insurer CEOs in Britain, asking them to pay close attention to the need to protect policyholders and remain sound before taking decisions on dividends or bonuses.
Global coronavirus cases surpassed 1 million on Thursday with more than 52,000 deaths, according to a Reuters tally of official data.
(Reporting by Alexander Huebner, Huw Jones; Writing by Rachel Armstrong; editing by John Stonestreet)
