Regulatory updates

In 2016, the Insurance Regulatory and Development Authority of India (IRDAI) had issued the framework for remuneration of non-executive directors/chief executive officer/whole time director/managing director of private sector insurers (the framework).

On 2 May 2023, IRDAI had issued an Exposure Draft (ED), thereby proposing to replace the extant guidelines of the framework. Based on the feedback received from various stakeholders, on 30 June 2023, IRDAI issued the final guidelines on remuneration of directors and KMPs of insurers (the guidelines). The guidelines aim to:

• Bring the remuneration of other KMPs also within the ambit of the proposed guidelines, and
• Provide better clarity to the extent of variable pay with respect to the total remuneration of directors and KMPs, variable pay deferral, malus and claw back provisions, accounting, disclosures, etc.

Some key aspects discussed include:

• Remuneration policy: It has been provided that the process of framing/reviewing the remuneration policy should be completed within three months of the issuance of the guidelines in this behalf
• Components of remuneration structure: The remuneration policy should cover all aspects of the remuneration structure and the remuneration policy should be reviewed annually by the Nomination and Remuneration Committee (NRC).
• Disclosures: Certain quantitative and qualitative disclosures have been mandated in the notes to accounts forming part of the annual report.

Effective date: The guidelines would be applicable w.e.f. F.Y. 2023-24.

To access the text of the guidelines, please click here