Irdai's pay reform may not solve key issues: Insurers

INSURANCE INDUSTRY EXECUTIVES have welcomed the Insurance Regulatory and Development Authority of India’s (Irdai) move to link executive pay to customer outcomes but say the framework falls short of addressing deeper structural issues affecting policyholders.

- NARAYANAN V

The regulator on Tuesday tightened remuneration norms for key managerial personnel (KMPs) at insurance companies, mandating that 50% of variable pay and incentives be linked to customer-centric parameters such as claims servicing, grievance redressal, product performance and financial soundness. The revised norms for managing directors and chief executives will come into effect from FY27. However, several industry executives said the final framework dilutes the sharper customer-outcome focus envisaged in Irdai’s draft proposal.

Under the final guidelines, the 50% weightage earmarked for performance-linked pay will be spread across six parameters including overall financial soundness, product performance, claims responsiveness, grievance redressal, implementation of Indian Accounting Standards (Ind AS), and removal of “dark patterns” in customer interactions. Of this, Ind AS implementation and dark-pattern removal will carry a 10% weightage each, effectively leaving only 30% weightage for core operating and customer-service metrics.