The Insurance Regulatory and Development Authority of India (“IRDAI / Authority”) has issued a Circular dated May 25, 2026 bearing reference
IRDAI/F&I/CIR/MISC/72/5/2026, on the subject of Remuneration to Key Management Persons (“KMPs”) of insurers.
The Circular is issued in exercise of powers conferred by Section 34 of the Insurance Act, 1938, Section 14 of the IRDA Act, 1999 and Regulation 12 of the IRDAI (Corporate Governance for Insurers) Regulations, 2024.
Key Highlights of the Circular
- The Circular amends the Master Circular on Corporate Governance for Insurers, 2024 with immediate effect.
- Disclosure of parameters forming the basis of remuneration package including incentives of MD & CEO, Directors and Key Management Persons.
- Disclosure of payments made to group entities and related parties.
- Public disclosure of KMP remuneration parameters on insurer websites in an easy-to-access and easy-to-understand manner.
- Financial soundness data shall be disclosed quarterly and product performance, claim responsiveness and grievance redressal data shall be disclosed monthly.
- Remuneration must be aligned with policyholder outcomes along with risk management principles.
Mandatory Performance Parameters for KMPs
- Overall financial soundness
- Products’ performance
- Claim responsiveness
- Grievance redressal
- Implementation of Indian Accounting Standards
- Removal of dark patterns in customer interactions
Summary of Modifications
| Sr. No. | Clause No. | Existing Provision | Changes Introduced | Revised Provision |
|---|---|---|---|---|
| 1 | 8.1(h) | Elements of remuneration package including incentives of MD & CEO, Directors and Key Management Persons. | Substituted | Parameters forming basis of remuneration package including incentives. |
| 2 | 8.2(i) | Payments made to group entities from Policyholders Funds. | Substituted | Payments made to group entities and related parties. |
| 3 | 8.3 | No previous provision | Inserted | Disclosure of performance of insurers relating to parameters adopted for remuneration of all KMPs. |
| 4 | 9.2(b) | Remuneration adjusted for risks and aligned with risk outcomes. | Substituted | Remuneration aligned with policyholder outcomes, risk alignment and governance. |
| 5 | 9.2(d) | Previous minimum performance parameters for variable pay. | Substituted | Six mandatory parameters with total weightage of 50%. |
Six Mandatory Parameters
| Sr. No. | Parameter |
|---|---|
| 1 | Overall financial soundness and improvements thereof |
| 2 | Products’ performance and improvements thereof |
| 3 | Claim responsiveness and improvements thereof |
| 4 | Grievance redressal and improvements thereof |
| 5 | Implementation of Indian Accounting Standards |
| 6 | Removal of dark patterns in company’s public interactions and distributors. |
Press Release Highlights
- IRDAI revised performance parameters applicable to KMPs to strengthen customer trust, transparency and accountability.
- The revised framework focuses on customer satisfaction, claim settlement, grievance resolution and fair customer-friendly processes.
- Insurers must disclose information in an easy-to-access and easy-to-understand manner.
- Enhanced disclosure requirements include product features, inclusions, exclusions,
FAQs, premium changes and claim settlement outcomes. - The framework aims to create a more customer-centric, transparent and trusted insurance sector.
Source category: IRDAI
Attachments
- /2026/656_2026_05_26_-_Press_Release_(Aligning_Performance_Parameters_with_Customer_Outcomes_and_Transparency)
- Circular_on_IRDAI_Remuneration_to_KMPs.pdf
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