Introduction
The remuneration payable to Chief Executive Officers (“CEOs”), Whole-Time Directors (“WTDs”) and Managing Directors (“MDs”) of insurance companies is governed under Section 34A of the Insurance Act, 1938. This provision requires insurers to procure prior approval from the Insurance Regulatory and Development Authority of India (“IRDAI”) in relation to such remuneration. The IRDAI (Remuneration of Non-Executive Directors of Private Sector Insurers) Guidelines, 2016 and IRDAI (Remuneration of Chief Executive Officer/Whole Time-Director and Managing Director of the Insurers) Guidelines, 2016 dated August 5, 2016 (collectively, the “Erstwhile Guidelines”) have historically governed this matter. In supersession of the Erstwhile Guidelines, the IRDAI has recently notified the Guidelines on Remuneration of Directors and Key Managerial Persons of Insurers, on June 30, 2023, which includes the IRDAI (Remuneration of Non-Executive Directors of Insurers) Guidelines, 2023 and IRDAI (Remuneration of Key Managerial Persons of Insurers) Guidelines, 2023 (collectively, the “Revised Guidelines”). The Revised Guidelines are effective from the FY 2023-24 i.e. from April 1, 2023 and the insurers are required to complete the process of framing/reviewing the remuneration policy within three months of the issuance of the Revised Guidelines.
