IRDAI's May 25 Circular on Executive Pay: Six Mandatory Parameters Carry 50% of Variable Pay, Including Claims, Grievances and Dark Patterns

India's insurance regulator has told insurers that the way they pay their most senior people must reflect how well they treat policyholders. The Insurance Regulatory and Development Authority of India issued a circular dated May 25, 2026 that amends its Master Circular on Corporate Governance for Insurers, 2024. Outlook Money reported it on May 27, saying the changes apply from the 2026-27 financial year, and Legitpro Law summarised it for Mondaq on June 3. The circular is therefore a late-May measure, ahead of the 2026-27 pay cycle it is meant to shape. The Mondaq article does not reproduce the circular or give a circular reference number, so the details here come from that and other published summaries.

The core of the change is a scorecard for key management personnel, the senior executives such as the chief executive and heads of key functions. According to Mondaq, six mandatory parameters together account for fifty percent of the total assessment used for variable pay and incentives. The six 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 interactions with customers. Outlook Money gives the weights of two of them, 10% each for implementing Indian Accounting Standards and for removing dark patterns, and says the remaining 50% of the variable pay weighting is set by insurers according to their business priorities and each executive's role. It names the factors for evaluating executives as speed of claim settlement, responsiveness to policyholders, grievance resolution efficiency and product performance. Neither summary gives the weights of the other parameters.

Dark patterns are website or app designs that can confuse customers or steer them into decisions they would not otherwise make. Including them in the executive scorecard puts the digital sales process, which has been a source of complaints, within the leadership's responsibility.

The circular also forces disclosure. Outlook Money reports that insurers must publish data on claims, such as the share of claims settled within 15, 30 and 60 days and beyond, and how many were fully paid, partially paid, rejected, repudiated or still pending. They must publish complaints resolved within set timelines and those still unresolved. Routine service requests and grievances should be kept separate, and a service request unresolved for more than seven days may need to be treated as a grievance. Claims, product performance and grievance data must be published monthly, and financial soundness data quarterly, on the insurer's website in a simple, accessible format, without requiring visitors to provide personal details. Mondaq adds that insurers must disclose the parameters behind executive remuneration, publicly report performance against them and make historical data available in an accessible format.

The metrics differ by type of insurer. For life insurers, Outlook Money lists renewal premium ratios, persistency levels, expense management and assets under management. For general and standalone health insurers, it lists incurred loss ratios, renewal business ratios and expense management indicators. Mondaq notes that sector-specific financial metrics now apply to life, general and health insurers, without giving figures. Persistency, a measure of how many customers keep their policies, appears in the earlier framework and not among the revised mandatory parameters in the Mondaq summary, though Outlook Money lists it for life insurers' disclosure.

Governance is part of the design. Boards and remuneration committees must show that executive incentives reflect policyholder interests, conduct risk and long-term governance objectives. Outlook Money adds that nomination and remuneration committees must coordinate with risk management committees when designing senior management pay. The summaries do not state a penalty for non-compliance, and they do not state deferral or clawback rules for variable pay, so those points should be checked in the circular itself.

The reaction in published coverage is limited. Outlook Money attributes a view to unnamed industry experts that the move could push insurers to improve customer servicing, since weak claim settlement or rising unresolved complaints may now affect executive incentives, and it quotes no named person or insurer. Law-firm commentary frames the circular as a form of indirect enforcement: instead of fining the company, the regulator changes what executives are rewarded for. Critics of such an approach could argue that pay set by regulator-defined measures reduces companies' commercial discretion, but the summaries reviewed do not record a named critic.

The design also reflects a view that conduct problems in insurance are partly incentive problems. When bonuses depend mainly on growth or profit, weaker claims handling or complaint resolution can look like a cost saving, and a scorecard that carries service measures changes that calculation for the people deciding how resources are allocated. Whether it works will depend on how rigorously boards score executives against the published data. For policyholders, the visible effect should be data. Once the monthly claims and grievance figures appear on insurers' websites, comparing insurers becomes easier. For insurers, the immediate work is building the scorecard, the reporting pipeline and the board oversight before the financial year's pay decisions. Readers who need the exact weights, definitions and transition rules should read the circular itself.