IRDAI Links Insurance CEO Pay to Customer Service Metrics
Why in the news
IRDAI has overhauled how senior executives in life, general and health insurance firms earn bonuses and incentives. Pay will now reflect how well insurers treat policyholders, not only business results.
Key facts
- Regulator: IRDAI; rules apply at once and will judge performance from FY 2026-27.
- Covered: MDs, CEOs, Whole-Time Directors and other Key Management Personnel (KMP).
- Variable pay depends on customer care, claim settlement speed and complaint resolution.
- Scoring split: 50% on IRDAI-prescribed customer and governance parameters, 50% on company performance set by the board.
- Two fixed 10% weights: Indian Accounting Standards implementation and removal of dark patterns, including by distributors.
How service is tracked
| Measure | Detail |
|---|---|
| Claim speed | Number of claims settled within 15, 30 and 60 days |
| Pending claims | Claims unresolved at the end of each reporting period |
| Complaints | Counted separately from service requests; resolution within set timelines tracked |
| Disclosure | Most such data to be disclosed monthly; financial soundness figures quarterly |
Transparency and risk
- Each insurer must post its pay parameters and three years of performance trends on its website in simple format.
- Risk symmetry: insurance is long-tail, since a policy sold now may produce claims years later, so pay must reflect actual risk taken and its time horizon.
- The Nomination and Remuneration Committee has to take inputs from the Risk Management Committee, keeping pay fair and risk-aligned.
Background
- Dark patterns are interface tricks that push users into unintended actions, such as pre-ticked add-on boxes, hidden unsubscribe options, misleading auto-renew designs and fake countdowns. The Central Consumer Protection Authority issued guidelines on them in 2023.
- KMP usually includes MD, CEO, Whole-Time Directors, CFO, CRO, Appointed Actuary, CIO, Chief Compliance Officer, Chief Marketing Officer and others the board names.
- Persistency ratio shows how many life policies remain in force after a period; for example 80% at 13 months means 80 of 100 policies are still renewed. High persistency signals satisfied customers, low persistency suggests mis-selling, lapse or surrender. IRDAI tracks it as a soundness measure for life insurers.
Exam angle
- Regulator: IRDAI; effective from FY 2026-27 appraisals.
- Weights: 50:50 split, with 10% each for Ind AS and dark patterns.
- Related terms: KMP, persistency ratio, dark patterns, risk symmetry.