Irdai asks private insurers to frame pay norms for top brass within 3 months

financialexpress.com:

Issuing revised guidelines applicable for remuneration payable to key managerial persons (KMPs) of private sector insurance companies from the current financial year, insurance regulator Irdai on Friday directed the insurers to complete the framing and reviewing of their remuneration policies based on this guidelines within three months.

The regulator said the primary objectives of the Insurance Regulatory and Development Authority of India (Remuneration of Key Managerial Persons of Insurers) Guidelines, 2023, are to ensure effective governance of compensation, alignment of compensation with prudent risk taking, effective supervisory oversight and stakeholders engagement and safety of interest of policyholders and other stakeholders.

Irdai said insurance companies should formulate and adopt a “comprehensive board approved” remuneration policy covering all KMPs. And, the policy should not encourage key managerial persons to take inappropriate or excessive risks for their performance-based variable remuneration. “The board shall ensure and document that in structuring, implementing and reviewing the remuneration policy, members of the board shall not placed in a position of actual or perceived conflict of interests with respect of remuneration decisions,” the revised guidelines said.

According to the revised guidelines, the minimum parameters which an insurance company should take into account for determination of performance assessment of all KMPs for payment of variable pay or incentives are overall financial soundness such as net-worth position, solvency, growth in AUM and net profit, compliance with expenses of management (EoM) regulations, claim efficiency in terms of settlement and outstanding, among others. These