In a landmark regulatory move on May 26, 2026, the Insurance Regulatory and Development Authority of India (IRDAI) amended its Corporate Governance for Insurers Regulations, 2024, linking the remuneration and incentives of Key Management Persons (KMPs) — including MDs, CEOs, and directors — to detailed customer-centric performance metrics.
What Changed?
IRDAI has mandated that at least 50% of variable pay for KMPs must be linked to six mandatory parameters: (1) financial soundness, (2) product performance, (3) claim responsiveness, (4) grievance redressal, (5) Ind AS implementation (10% weightage), and (6) removal of dark patterns (10% weightage). The remaining 50% is left to the board or nomination and remuneration committee.
This represents a fundamental shift from the earlier principles-based approach to a more rule-based supervisory regime.
For Life Insurers
Specific metrics include AUM-to-total-premium ratio, renewal premium to new business premium ratio, policy retention metrics, and expense of management to GDP ratio. Poor policy persistency or rising expenses will now directly impact executive compensation.
For General and Health Insurers
Parameters include line-wise net incurred loss ratio, renewal premium to new business premium ratio, expense of management to GDP ratio, and claim responsiveness indicators. Delayed claim settlements or deteriorating loss ratios will hit executive pay.
Public Disclosure Mandates
Insurers must now publish on their websites: financial soundness data quarterly; claim responsiveness, grievance handling, and product performance data monthly. This data must be easy to access and not require visitors to share personal details like phone numbers.
Sources: Hindu BusinessLine (May 26, 2026), Economic Times (May 26, 2026), Financial Express (May 26, 2026)