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Informist, Tuesday, May 26, 2026

 

MUMBAI – The Insurance Regulatory and Development Authority of India has asked insurance companies to link the remuneration of key management personnel to customer-centric metrics under amendments to the Master Circular on Corporate Governance for Insurers, 2024. "Nomination and Remuneration Committee of the insurer in consultation with the Risk Management Committee shall make a coordinated effort to have an integrated approach to the formulation of the remuneration policy," IRDAI said in a circular dated Monday.

 

The nomination and remuneration committee shall ensure that remuneration is aligned to policyholder outcomes and is adjusted for all types of risk, the insurance regulator said in its circular. The committee shall also ensure that remuneration outcomes are "symmetric with risk outcomes", remuneration payouts are "sensitive to the time horizon of the risk", and the mix of cash and equity are consistent with risk alignment, it said.

 

The regulator also outlined six parameters to be mandatorily taken into account for assessment of performance of all key management personnel for payment of variable pay or incentives. These are overall financial soundness and improvements for life insurers as well as general and standalone health insurers, product performance, claim responsiveness, grievance redress, implementation of Indian accounting standards, and removal of dark patterns in the company's own interaction with the public and ensuring the same for its distributors.

 

The six parameters shall have total weightage of 50% in performance assessment, with the last two parameters carrying a weightage of 10?ch, IRDAI said. The weights of the other four parameters are left to the company boards to decide for themselves. For the remaining 50% weightage, the nomination and remuneration committee or the board may adopt additional parameters in line with the business plan of the company, IRDAI said.

 

"The weightage for each of the additional parameters may be configured suitably for MD/CEO/WTDs (managing director/chief executive officer/whole-time directors) and other KMPs (key management personnel) depending on their respective roles," IRDAI said in the circular. "These parameters shall be spelt out in the remuneration policy," it added. The board of each insurer shall decide improvement benchmarks based on its business strategy and assess the performance accordingly, it added.

 

"...the revised performance framework will move beyond traditional operational and financial metrics to include a stronger focus on customer-centric and governance-oriented outcomes," IRDAI Chairman Ajay Seth said in a press release Tuesday. "This change reflects IRDAI's emphasis towards building a more customer-centric, transparent, and trusted insurance sector."  End

 

Reported by Nandini Sinha

Edited by Rajeev Pai

 

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