IRDAI Wants Insurance CEOs' Salary Package Judged on Claims, Grievances and Customer Trust: Report

Moneylife Digital Team 19 May 2026

Personal Finance

The insurance regulatory and development authority of India (IRDAI) has reportedly proposed linking the salaries of insurance company chief executive officers (CEOs) to customer outcomes, while also introducing malus and clawback provisions and greater transparency in executive remuneration.

According to a report by The Times of India (ToI), the insurance regulator has circulated a discussion paper among insurance company CEOs outlining a new compensation framework aimed at shifting the focus from short-term financial performance to sustainable and policyholder-centric outcomes.

The move follows an internal IRDAI study that found wide disparities in CEO salaries across the insurance sector, with key management personnel in some companies accounting for a significant share of the total wage bill.

The discussion paper reportedly states that existing compensation structures are 'largely tied to revenue, profit, and shareholder returns' and have 'failed to capture the long-term value created through positive customer outcomes'.

Under the proposed framework, executive compensation would be linked to a combination of customer, shareholder and regulatory metrics, with customer-related parameters carrying the highest weightage.

According to the TOI report, these parameters would include claim settlement timelines, grievance redressal efficiency, transparency in product disclosures and overall customer experience. The regulator aims to make customer satisfaction, trust and loyalty central to the evaluation of top management performance.

IRDAI has also reportedly proposed introducing malus and clawback provisions in compensation structures to strengthen accountability at the senior management level.

Under the proposed norms, executive pay could be reduced or recovered if insurers witness a spike in customer complaints, face regulatory breaches, or are found guilty of mis-selling and unethical business practices.

The proposal is also linked to the regulator’s broader efforts to reduce insurance distribution costs and commissions in order to make insurance products more affordable for customers.

The IRDAI study reportedly highlighted substantial variation in executive compensation across the sector. Among leading life insurers, the standard deviation in CEO remuneration was found to be around ₹7.9 crore, while among non-life insurers, it was about ₹11.4 crore.

The regulator also expressed concern over what it described as 'top-heavy' management structures in certain insurance companies. In some cases, management remuneration reportedly accounted for as much as 14% of the total salary outgo.

According to the report, IRDAI believes better alignment between executive pay and customer outcomes could improve trust in insurance products, strengthen customer confidence and support wider insurance adoption in the country.

To improve transparency, the regulator has also proposed public disclosure of remuneration paid to chief executives and key management personnel (KMPs).

Comments

User

Kamal Garg

3 weeks ago

Why only insurance companies, all public facing companies including banks, etc, must be accountable on all the public / customer related metrics and not just the profitability based criteria. This will bring a sea change in the way these companies are managed and run.

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