Delayed claim settlements, unresolved complaints, and subpar customer service have long been ongoing issues in the insurance sector, despite policyholders paying premiums for years.
Now, in a significant move focused on policyholders, the Insurance Regulatory and Development Authority of India (IRDAI) has linked the pay and incentives of top insurance company executives to parameters such as claim settlement responsiveness, grievance redressal, and product performance.
“Traditionally, insurance executives were rewarded based on growth and profits. IRDAI’s new circular changes all that by tying a part of their variable pay to things that matter to customers such as how quickly claims get settled, how complaints get addressed, how products actually perform,” says Trupti Balasubramaniam – CEO & Principal Officer, Probus.
What parameters will decide KMP remuneration?
For FY 2026-27, IRDAI has made six parameters mandatory for assessing KMP performance and determining variable pay or incentives. These include:
- Financial soundness and improvements
- Product performance and improvements
- Claim responsiveness and improvements
- Grievance redressal and improvements
- Implementation of Indian Accounting Standards (Ind AS)
- Removal of dark patterns in insurer and distributor interactions
The regulator has specified that these six parameters, together, must carry a 50% weightage in the performance assessment of KMPs. Out of this:
Implementation of Ind AS will carry 10% weightage
Removal of dark patterns will carry 10% weightage
The insurer’s board may decide the remaining weightage for the other four parameters.
Insurers must publicly disclose claim settlement performance
One of the biggest changes for policyholders is the mandatory disclosure of claim responsiveness data.
Insurers will now have to disclose how many claims are settled within 15 days, 30 days, 60 days and beyond, along with details of claims paid fully, partially, repudiated, rejected or remaining unsettled.
It’s important to note that IRDAI has made it clear that claim settlement timelines will be counted from the date the claim is filed and not from the date all documents are submitted. The regulator said facilitating documentation should be the insurer’s responsibility.
