IRDAI norms on pay to private insurers’ top brass extended to KMPs

Hyderabad, June 30, 2023 

Insurance regulator IRDAI has decided to bring key managerial persons (KMPs) of private insurance companies also, in addition to the top brass who are covered now, under the ambit of its guidelines on remuneration.

The guidelines at present govern remuneration of CEOs, whole time directors, managing directors and non-executive directors of private insurers.

Based on the implementation and compliance, since October 2016, it has been decided to bring KMPs other than the CEO also within the ambit of the guidelines, which provide a framework for remuneration, as well as give more clarity to the extent of variable pay, malus and clawback provisions, accounting and disclosures, the regulator said.

The guidelines will be applicable to remuneration payable to KMPs, of private insurers, from 2023-24. IRDAI wants the companies to complete the process of framing/reviewing the remuneration policy based on the guidelines within three months. It wanted them to formulate and adopt a comprehensive Board approved policy covering all the KMPs, which among other things, should not encourage the such employees to take inappropriate or excessive risks for their performance based variable pay.

In the revised guidelines on non-executive directors, their remuneration and other associated aspects, IRDAI said the remuneration, to each director, should not exceed ₹20 lakh per annum. The non-executive directors will not be eligible for any equity-linked benefits. The maximum age limit for non-executive directors, including the chairperson of the Board, will be 75 years after which they should not continue on the Board.

IRDAI said the objectives behind the revised guidelines are to ensure effective governance of compensation; alignment of the compensation with prudent risk taking; effective supervisory oversight and stakeholder engagement; besides ensuring safeguarding the interests of policyholders and other stakeholders.

[The Hindu]