The Insurance Regulatory and Development Authority of India (IRDAI) has implemented stricter regulations regarding top executive pay in the insurance industry. Key Management Personnel (KMPs), including chief executives, will now have their bonuses and incentives tied to specific performance metrics such as claims settlement speed, grievance redressal, and product performance. Factors like cost efficiency, policy retention, and complaint resolution rates will also influence their remuneration.
These changes mandate that at least 50% of the evaluation of KMPs’ performance from the fiscal year 2027 onwards must be based on these core parameters. Additionally, the disclosure of claim responsiveness must include details on the proportion of claims settled within specific timeframes and those remaining unresolved.
The new framework requires insurers to publish their performance metrics transparently on their websites, enabling policyholders to make more informed decisions. The Board will set improvement benchmarks aligned with the company’s business strategy, evaluating performance based on complete and consistent disclosures.
The Indian government has also announced 100% foreign direct investment (FDI) in the insurance sector under the automatic route. This move allows for increased foreign participation in insurance companies, subject to compliance with the Insurance Act, 1938, and approval from the IRDAI for insurance-related activities.
