Page 52 - Insurance Times February 2022

2. For Non-Executive Directors (NEDs): with 70% attributing to quantitative
i. Apart from sitting fee and other expenses, it parameters and 30% to qualitative parameters.
provides for payment of remuneration The insurer is required to specify the
commensurate with an individual director’s performance parameters on the basis of which
responsibilities and demands on time, which are the variable pay will be evaluated.
considered sufficient to attract qualified competent
individuals, in the form of fixed remuneration. Such iv. Malus and Clawback – the deferred remuneration
should be subject to malus/clawback arrangement
remuneration, however, shall not exceed Rs.
in case of any negative trend in the performance
Twenty lakh per annum for each such director
excluding Chairman. For the Chairman of the of the insurer.
Board, the remuneration may be decided by the 4. Tenure of MD&CEO and WTDs has been aligned with
Board of Directors of the respective company. the RBI’s stipulation in this regard.
ii. NEDs shall not be eligible for ESOPs. Prior approval 5. Further, the remuneration guidelines also provide the
of the Authority shall be required for any allotment broad principles for remuneration of risk control and
of sweat equity to the NEDs. compliance staff which are broadly in lines with RBI
iii. The maximum age and numbers of years which a stipulations.
person can serve as NED, including as Chairman has A copy of the Guidelines is placed as annexure-1. All are
been aligned with the guidelines issued by RBI.
requested to offer their comments / suggestions on the
3. For Whole Time Directors / Chief Executive / Managing proposed guidelines. The comments / suggestions should
Directors reach in the format attached as annexure-2 by 19th January,
i. The remuneration structure shall be divided 2022 to Ms. Shruti Srivastava by e-mail at
between fixed pay, perquisites and variable pay. shruti.srivastava@irdai.gov.in with a copy to the
ii. Fixed Pay should be reasonable and all the fixed undersigned at rksharma@irdai.gov.in .
items, including perquisites, shall be treated as R K Sharma
part of fixed pay.
General Manager
iii. Variable Pay
a) Limit on variable pay: at least 50% of the IRDAI (Surety Insurance Contracts)
remuneration subject to maximum 300% of Guidelines, 2022
the fixed pay. Where variable pay is up to
IRDAI/NL/GDL/SIC/01/01/2022
200% of the fixed pay, a minimum of 50% of
the variable pay should be via non-cash Date:03-01-2022
instruments. The same limit would be 70%, in
case the variable pay is above 200% of the fixed The Authority, considering the specific nature of Surety
Insurance owing to the unique risk and features of the
pay.
products, hereby issues the following guidelines to regulate
b) Deferment – Minimum of 50% of the variable and develop Surety Insurance business.
pay must be deferred on ‘no faster than pro-
rata’ basis over a period of three years. No The guidelines shall come into force with effect from 1st
deferment required if the variable pay does not April, 2022. The guidelines have been placed on the IRDAI
exceed Rs. 15 lakh. website (https://www.irdai.gov.in).
c) Variable Pay Formula – a variable pay formula (Yegnapriya Bharath)
with identified weightage has been prescribed Chief General Manager (Non-Life)

52 The Insurance Times, February 2022