What IRDAI Is Proposing
The Insurance Regulatory and Development Authority of India (IRDAI) is pushing for a structural change to how insurance company CEOs and Managing Directors are compensated. The proposal, which has been building momentum through 2025–26, would tie a portion of executive pay to measurable customer outcomes — not just revenue growth, premium collections, or shareholder returns.
The specific metrics under consideration include:
Claim Settlement Ratio (CSR): The percentage of claims an insurer pays out versus those filed. A low CSR is the single clearest signal that a company exists to collect premiums, not to pay claims.
Customer Complaint Volume: The number of grievances registered with IRDAI's Integrated Grievance Management System (IGMS). A rising complaint count means customers are being failed.
Grievance Resolution Turnaround: How fast a company resolves complaints once they're lodged. Slow resolution is a deliberate friction tactic used to exhaust policyholders into giving up.
Customer Satisfaction Scores: Survey-based scores measuring whether customers feel they were treated fairly at renewal, claim, and service touchpoints.
This isn't a final regulation yet — it's a direction IRDAI is signalling clearly. The Chairman has repeatedly framed customer-centricity as non-negotiable within the "Insurance for All by 2047" vision. Tying executive pay to outcomes is the clearest enforcement mechanism available.
The Numbers Tell You Why This Is Overdue
Look at the data and the problem becomes impossible to ignore.
That 58–98% range in health insurance settlement ratios is the critical number. It means that if you pick the wrong insurer, you have a nearly 1-in-2 chance of having a legitimate claim rejected. The insurer's CEO has faced zero direct financial consequence for that outcome. Premium revenue keeps flowing regardless.
| Insurer Category | Claim Settlement Ratio | Status |
|---|---|---|
| PSU Life Insurers (e.g., LIC) | ~98–99% | Strong |
| Private Life Insurers (top quartile) | ~96–98% | Strong |
| Private Life Insurers (bottom quartile) | ~88–93% | Moderate |
| Private Health Insurers (top quartile) | ~90–98% | Strong |
| Private Health Insurers (bottom quartile) | ~58–72% | Poor |
This is not a marginal gap. A 40-percentage-point spread in health claim settlement ratios means two customers paying identical premiums for similar covers can have completely different experiences when it actually matters. The bottom-quartile insurers have faced no structural incentive to fix this — until now.
India isn't alone. The UK's Financial Conduct Authority links supervisory expectations to Consumer Duty outcomes. US state regulators use complaint-ratio triggers that force leadership attention onto customer outcomes. IRDAI is moving in the same direction — arguably late, but moving.
The Hidden Conflict: Why CEOs Haven't Been Measured This Way Before
Insurance is a structurally unusual business. Revenue (premiums) is collected upfront. The cost — claims — comes later, sometimes years later. A CEO who wants to look good on this year's P&L has every incentive to be aggressive about rejecting claims, slow about resolving grievances, and opaque about settlement ratios.
"A CEO measured on premium growth and return on equity has no personal financial reason to ensure your claim gets paid quickly. That's not cynicism — that's the incentive structure."
Boards and remuneration committees have largely reflected this. Compensation packages at major private insurers are built around revenue targets, combined ratios, and stock performance. Customer satisfaction scores, if they appear at all, carry minimal weightage — often less than 5–10% of variable pay.
The distribution channel compounds the problem. When insurers sell through agents and aggregators on commissions of 30–60% of first-year premiums, the incentive is to sell volume, not match customers to the right product. IRDAI's proposal attacks this at the source: make the people at the top personally accountable for what happens when customers actually need the product.
How This Connects to InsureScan's Mission
When we built InsureScan, we started from a simple observation: the information asymmetry in Indian insurance is not accidental. It's engineered. Customers don't know claim settlement ratios before buying. They don't know that the agent recommending a policy earns a 40% commission on it. They don't know that two policies with identical premium amounts can have radically different real-world payout behaviour.
Platforms like PolicyBazaar — which earns 30–60% commissions on the policies it recommends — have a direct financial conflict of interest when presenting "comparisons." The highest-commission product and the best product for the customer are frequently not the same product.
InsureScan was built differently. We surface commission data upfront. We lead every comparison with claim settlement ratio, not premium price. We don't earn more if you buy a more expensive policy.
What IRDAI is now proposing — linking executive pay to customer outcomes — is regulators formalising what InsureScan has operated on from day one: the only legitimate measure of an insurance product is whether it pays claims, resolves complaints, and treats customers fairly.
We're glad the industry is being pushed to think this way. We built for customers who already demanded it.
What Should You Do Right Now?
The regulation isn't final. The industry will lobby. Implementation will take time. In the meantime, nothing stops you from applying this framework yourself:
1. Check the claim settlement ratio first, always. For health insurance, anything below 85% should require a very compelling reason to proceed. For life insurance, below 95% is a red flag.
2. Look at complaint data. IRDAI's annual reports publish insurer-wise complaint ratios (complaints per 10,000 policies). A high complaint ratio is a leading indicator of a bad claims experience.
3. Ask what commission your intermediary earns. If they can't or won't tell you, that's an answer in itself.
4. Compare before you buy. Not just on premium — on claim settlement ratio, complaint ratio, cashless hospital network density, and policy exclusion clauses. This is exactly what InsureScan's comparison tool is built to surface.
The regulator is moving in the right direction. Until the new rules kick in, you're still on your own. Use the tools available to you.