Irdai Revamps Remuneration Norms for Insurers' Top Brass

Irdai has updated its guidelines linking senior management remuneration to customer-focused outcomes and financial health. This move aims to enhance transparency and accountability across insurers with a focus on performance parameters including grievance redressal and claim responsiveness.

Regulator Irdai has asked insurers to link remuneration packages of MDs, CEOs, and other senior management to customer-centric outcomes, like claim responsiveness and grievance redressal, as well as the overall financial health of the company.

The Insurance Regulatory and Development Authority of India (Irdai) has made amendments to the IRDAI (Corporate Governance for Insurers) Regulations, 2024.

In a circular on remuneration to key management persons (KMPs), the regulator has outlined the 'parameters forming the basis of remuneration package (including incentives) of MD and CEO and all other directors and other senior management officials.

The new norms have come into force immediately.

In a statement on Tuesday, Irdai said revisions of the performance parameters are part of its continued commitment to strengthening customer trust, improving transparency, and reinforcing accountability across the sector.

The parameters include financial soundness, products' performance, claim responsiveness, timely grievance redressal, and removal of dark patterns from websites of insurers and their distributors.

The guideline also mandates disclosure of the performance of insurers in respect of parameters adopted for remuneration of all KMPs.

While some mandated disclosures have to be made quarterly, some are also required on a monthly basis, in an 'easy to access' and 'easy to understand' manner on the company's website, without seeking personal details, including the phone number of visitors.

While information on financial soundness has to be disclosed on a quarterly basis, that related to products' performance, claim responsiveness, and grievance redressal is required on a monthly basis.

"Evolving expectations of customers and needs of the economy require us to place greater emphasis on measurable customer outcomes, transparency in decision-making, responsiveness, and sustainable value creation," said Ajay Seth, Chairman, Irdai.

Accordingly, the revised performance framework will move beyond traditional operational and financial metrics to include a stronger focus on customer-centric and governance-oriented outcomes, he added.

The updated performance framework, while laying emphasis on customer outcome orientation, further empowers Boards to emphasise improvement in customer satisfaction and experience indicators, timely resolution of claims and grievances, reduction in repeat complaints and service failures, and delivery of fair, transparent, and customer-friendly processes.

Irdai said it aims to enhance transparency and accountability through timely, consistent and accurate disclosure of comparable information across insurers for the current and preceding three years.

Meanwhile, Rajay Sinha, Member (Finance and Investment), said that refinement and revisions related to reducing the expense of management, promoting rural and social obligations and boosting coverage of government-promoted schemes such as PMJJBY and PMSBY will be taken up in the proposed revision of respective regulations and master circulars.