IRDAI Ties Insurer Executives' Variable Pay to Claims, Grievances and Dark-Pattern Removal in New Governance Circular

India's insurance regulator wants insurers' bosses to be paid, in part, for how well they treat customers. A circular issued by the Insurance Regulatory and Development Authority of India (IRDAI) on May 25, 2026, amends its master circular on corporate governance for insurers, first issued in 2024, to tie the variable pay and incentives of key management personnel and senior management to customer-centric and soundness measures. According to Outlook Money and the Mondaq legal commentary, the amendment takes effect from the 2026-27 financial year. This article summarises those reports. An earlier version said the circular took effect immediately and described it as amending the 2024 Regulations themselves. The reports we reviewed describe an amendment to the 2024 master circular, with application from FY 2026-27, so the article has been corrected.

What are the new parameters? Six core parameters together carry a 50% weightage in determining variable pay. They are overall financial soundness, product performance, claims responsiveness, grievance redressal, implementation of Indian Accounting Standards, and the removal of dark patterns in insurer and distributor customer interactions. Outlook Money reports that implementation of Indian Accounting Standards and removal of dark patterns each carry 10%, while it does not give individual weights for the other four. The remaining 50% of the assessment is left to insurers, who base it on their own business priorities and the individual executive's role. The reports do not state what proportion of total pay is variable, and they do not describe deferral or clawback rules, so readers should not assume the circular includes them.

What are dark patterns? The term refers to website and app designs that steer users into choices they might not otherwise make, for example by hiding opt-outs, making cancellation difficult or pre-ticking extra products. Including them in executive pay metrics means that leaders would be assessed on the removal of such practices from insurer and distributor channels.

What extra measures apply by type of insurer? According to Outlook Money, life insurers will be assessed on indicators such as renewal premium ratios, persistency, expense management and assets under management. General insurers and standalone health insurers will be assessed on incurred loss ratios, renewal business ratios and expense management indicators. These line-specific measures sit alongside the six core parameters.

What must insurers disclose? The disclosure rules are detailed. On claims, insurers must report the share of claims settled within 15, 30, 60 and more than 60 days, and the numbers of claims fully paid, partially paid, rejected, repudiated or pending, with monthly updates. On grievances, they must report complaints resolved within the specified timelines and those still unresolved, also monthly. A service request unresolved for more than seven days may be treated as a grievance. Financial soundness disclosures are updated quarterly. Insurers must post executive-pay performance information on their websites in a simple, accessible format, and must not ask users for personal details simply to view the disclosures. Mondaq adds that insurers must disclose the parameters behind pay for key management personnel and directors, report performance against those parameters and make prior-year information available.

What is the role of boards? Nomination and remuneration committees must coordinate with risk management committees when designing senior management pay policies. Mondaq says boards and remuneration committees will be expected to demonstrate that executive incentives reflect policyholder interests, conduct risk and long-term governance objectives. In practice, that means that a bonus structure that rewards premium growth alone will be harder to defend.

How have insurers reacted? Business Standard's headline describes insurers as wary, and the circular is characterised as a tightening of an already demanding framework. We have not seen published statements from named insurers in the sources reviewed, so this article does not attribute any particular view to a specific company.

What does it mean for policyholders? If the measures work as intended, claims handling and complaint resolution become part of how insurers' leaders are judged financially. Public monthly data would let customers and journalists compare insurers on settlement speed and complaint resolution. The effect will depend on how consistently insurers report and how closely IRDAI checks the data. A weighting of 50% sounds large, but the way each parameter is scored is left to the insurer's remuneration framework, and the reports do not describe a standard scoring method.

For insurers, the practical work is in building the data systems to track claims timing and complaints accurately, because the same figures will now be published and used to decide pay. Smaller insurers may find the reporting burden heavier than larger ones, a point the reports do not address directly.

More broadly, linking pay to conduct is a trend in financial regulation globally. The Indian approach is notable because it names specific consumer outcomes, such as claim timelines. Whether it improves experience for policyholders will become clearer after the first full year of disclosures in 2026-27. This article reports published summaries of the circular and is not legal advice; insurers and advisers should read the circular itself.