IRDAI Ties Insurance Executive Pay to Claims Settlement and Customer Grievances

The Insurance Regulatory and Development Authority of India has overhauled how senior executives at insurance companies are compensated, tying a substantial share of their variable pay to how well they serve policyholders. Under the revised norms, bonuses and incentives for managing directors, chief executives, whole-time directors and other key management personnel at life, general and health insurers will be assessed against metrics including claims settlement speed, grievance redressal performance and overall customer outcomes. The framework takes effect immediately and will be applied to performance reviews from the 2026-27 financial year onward. The regulator has also introduced malus and clawback provisions, meaning pay can be reduced or recovered where insurers see a spike in complaints, face regulatory breaches, or are found to have engaged in mis-selling or unethical practices. The changes follow an internal study that identified wide disparities in executive compensation across the sector and raised concerns about top-heavy management structures at some companies, where management remuneration reportedly accounted for as much as 14% of total salary outgo. Industry participants have voiced concern about growing regulatory intervention in governance matters.