The Insurance Regulatory and Development Authority of India (IRDAI), in its draft, suggested to private insurance companies that companies should adopt a comprehensive remuneration policy approved by the board of directors.
After issuing revised guidelines applicable to remuneration payable to Key Managerial Persons (KMPs) of private sector insurers from the current financial year, insurance regulator IRDAI on Friday asked insurers to formulate their remuneration policies based on these guidelines within 3 months. And instructed to complete the review.
Earlier, the Insurance Regulatory and Development Authority of India (IRDAI) in its draft had suggested to private insurance companies that companies should adopt a comprehensive remuneration policy approved by the board of directors, which should cover all key managerial positions. “The policy should be designed in such a way that variable remuneration based on performance does not encourage key managers to take undue or excessive risk,” the authority said.
The guidelines were last issued in 2016.
The insurance regulatory body said that the basic objective of the Remuneration Guidelines for Key Managerial Personnel of Insurers, 2023 is to ensure effective administration of compensation, effective supervisory oversight and stakeholder participation and safeguard the interests of policyholders and other stakeholders. There is security. The current remuneration guidelines were issued in October, 2016. On the basis of this, remuneration is given to top executives and non-executive directors of private insurance companies at present.
The insurance regulator said that after 6 years of implementation of the existing guidelines and based on the experiences gained during this period, it is now being proposed to bring other key managerial posts under its ambit. The new draft will replace the provisions currently in force.
IRDA said insurers should frame and adopt a “comprehensive board approved” remuneration policy covering all KMPs and, the policy should not encourage key managerial personnel to take undue or excessive risk for their performance-based variable remuneration should do.”
These parameters should carry at least 60% of the total weightage in the performance appraisal matrix of the MD/CEO/WTD (Whole Time Directors) and at least 30% of the total weightage in the performance appraisal matrix of other KMPs individually.
