The Insurance Regulatory and Development Authority of India (IRDAI) has reportedly proposed linking the pay of insurance company chief executives to customer outcomes. The regulator also plans to introduce malus and clawback provisions and increase transparency in remuneration.

According to a report in The Economic Times, the proposal followed a study by IRDAI that found wide variation in CEO salaries. In some cases, key management personnel account for a significant share of total wage costs. The discussion paper circulated among CEOs emphasises the need to move beyond short-term financial performance and focus on sustainable, policyholder-centric outcomes, it said.

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Currently, compensation structures are largely tied to revenue, profit, and shareholder returns. IRDAI noted that these have failed to capture the long-term value created through positive customer outcomes. Under the proposed framework, executive pay would be linked to a mix of customer, shareholder, and regulatory metrics, with customer-related parameters carrying the highest weight, the report said.

These customer-related metrics include claim settlement timelines, grievance redressal, transparency in product disclosures, and overall customer experience. The aim is to ensure that customer satisfaction, trust, and loyalty become central to evaluating top management performance.

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The paper also proposed penalties in compensation through malus and clawback provisions if insurers fall short on conduct. Pay could be reduced if customer complaints increase, regulatory breaches occur, or misselling and unethical practices are identified. 

The study showed wide variation in salaries, with the standard deviation in CEO pay among leading life insurers at Rs 7.9 crore and Rs 11.4 crore for non-life insurers.

IRDAI also raised concerns over the top-heavy structure of insurers, where management remuneration can account for up to 14% of total salary outgo. The regulator said better alignment of pay with customer outcomes could address these issues by improving trust in insurance products and driving wider adoption.

Published on: May 19, 2026 9:50 AM IST