IRDAI’s revised KMP remuneration framework: disclosure, performance linkage and governance overhaul

The Insurance Regulatory and Development Authority of India (IRDAI) has overhauled the remuneration framework for Key Management Persons (KMPs) of insurers through an amendment to the Master Circular on Corporate Governance for Insurers, 2024. The changes are aimed at ensuring that KMP pay is transparent, performance-linked, risk-sensitive and strongly aligned with policyholder outcomes.

Issued vide circular Ref: IRDAI/F&I/CIR/MISC/72/5/2026 dated 25.05.2026, these amendments operate under 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 (“CG Regulations, 2024”).

This revised framework introduces:

  • Mandatory public disclosures on insurers’ websites of performance metrics used to determine KMP remuneration, with three years’ comparative data
  • A standardised set of minimum performance parameters that must be used for KMP variable pay in FY 2026-27
  • Clear weightages for key governance and customer-centric factors, such as implementation of Indian Accounting Standards and elimination of “dark patterns” in customer interactions
  • A reinforced role for the Nomination and Remuneration Committee (NRC) and Risk Management Committee (RMC) in designing and supervising the remuneration architecture

Background: from CG Regulations, 2024 to the revised Master Circular

The regulatory backdrop is as follows:

  • The IRDAI (Corporate Governance for Insurers) Regulations, 2024 (“CG Regulations, 2024”) were notified on 21.03.2024. These regulations broadly delineated the corporate governance expectations from Boards of insurers.
  • To operationalise those expectations, IRDAI issued the Master Circular on Corporate Governance for Insurers, 2024 (“Master Circular on CG”) vide Ref: IRDAI/F&I/CIR/MISC/82/5/2024 dated 22.05.2024.
  • The present circular amends specific clauses of that Master Circular, with immediate effect, to sharpen the governance regime around remuneration of MD & CEO, directors and all KMPs.

Key amendment areas

The circular primarily alters:

  1. The disclosure requirements under Clause 8 of the Master Circular
  2. The governance role and approach of the Nomination and Remuneration Committee under Clause 9.2(b)
  3. The minimum mandatory performance parameters for determination of variable pay of KMPs under Clause 9.2(d)

Each of these areas is explained below.

Enhanced public disclosures on KMP remuneration parameters

Revised disclosure items in the corporate governance section

Clause 8.1(h) and (i) of the Master Circular on CG have been substituted. Insurers must now specifically disclose:

  • Parameters forming the basis of remuneration packages (including incentives) of the MD & CEO, all directors and every other KMP
  • Payments made to group entities and related parties

This ensures that stakeholders can clearly see not only how much is being paid, but on what performance foundation and in what related-party context such payments are made.

New Clause 8.3: mandatory public disclosure of performance against KMP pay parameters

A new Clause 8.3 is inserted, creating a strong transparency obligation regarding the performance metrics used for KMP pay.

a) Scope and format of disclosure

Insurers must:

  • Disclose, on their websites, their own performance against the parameters adopted for remuneration of all KMPs (as referenced in para 9.2(d))
  • Provide corresponding data for the preceding 3 years for comparison
  • Present the information in an “easy to access” and “easy to understand” format
  • Not demand any personal details (including telephone numbers) from website visitors to access these disclosures

Note: The intent is to empower policyholders and the general public to make informed decisions and to assess whether KMP remuneration is justifiably linked to actual performance, financial soundness and customer-centric outcomes.

b) Frequency of data updates

The circular prescribes different periodicity for various performance parameters:

  1. Quarterly disclosure of:

    • Financial soundness (as per para 9.2(d)(i))

  2. Monthly disclosure of:

    • Products’ performance
    • Claim responsiveness
    • Grievance redressal
    • Improvements in each of the above

These disclosures must contain Year-To-Date (YTD) information, updated as per the specified frequency.

Strengthened role of NRC and RMC in remuneration design

Integrated and risk-sensitive remuneration policy

Clause 9.2(b) has been substituted to reinforce the cooperation between the Nomination and Remuneration Committee and the Risk Management Committee. The two committees are required to jointly adopt an integrated approach in formulating the insurer’s remuneration policy.

The NRC must ensure that: