It also proposed that there should be no variable pay to Managing Director (MD), Chief Executive Officer (CEO), Whole-Time Directors (WTD) and Key Management Persons (KMPs) for the financial year in which the actual expenses exceed the projected expenses by more than 10 per cent
After having consultations with various stakeholders, the insurance regulator IRDAI on Wednesday has proposed amendments to the existing regulations to make single management expense limit of 30 per cent of gross premium written in a financial year in the case of general insurers and 35 per cent for standalone health insurers.
Currently, there are segmental and sub-segmental management limits for insurers.
The IRDAI has clarified that while various regulatory reforms initiated/taken up by the regulator are aimed at increasing insurance penetration and facilitating sustainable growth of the industry, efforts are made to ensure that interests of all stakeholders and particularly the policyholders are taken into consideration in the various measures undertaken.
The draft Irdai (Expenses of Management of Insurers Transacting General or Health Insurance Business) Regulations, 2022, has proposed the insertion of a single limit of ‘Expenses of Management’ and additional allowances towards the rural sector and government welfare-oriented schemes; also for expenses towards ‘insurtech’ and ‘insurance awareness’.
It also proposed that there should be no variable pay to Managing Director (MD), Chief Executive Officer (CEO), Whole-Time Directors (WTD) and Key Management Persons (KMPs) for the financial year in which the actual expenses exceed the projected expenses by more than 10 per cent.
In another exposure draft on expenses of management in the case of life insurers, Irdai has suggested the introduction of an objective clause to give flexibility to the insurers to manage their expenses within overall limits based on their gross written premium.
As per the draft, there may be an additional allowable expense of up to 15 per cent incremental premium over the previous year towards rural sector business and government schemes.
It also talks about additional allowable expenses up to 15 per cent of the premium for Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY).
The IRDAI has invited comments on the two draft regulations by December 14.