Close on the heels of mutual funds (MFs) disclosing remuneration of its top executives following a directive from market regulator SEBI, insurance companies have also been asked to provide information on executive pay. The Insurance Regulatory and Development Authority of India (IRDAI) has directed insurance companies to disclose details of remuneration paid to key executives from 2016-17.
IRDAI has mandated insurance companies to disclose remuneration of managing director (MD), chief executive officer (CEO) and key management persons in its revised guidelines on corporate governance. “Elements of remuneration package (including incentives) of MD & CEO and all other directors and key management persons should be disclosed,” the regulator said.
“These (revised) guidelines) are applicable from FY (financial year) 2016-17,” it said. “The IRDAI (Preparation of Financial Statements and Auditors’ Report of Insurance Companies) Regulations, 2002, have prescribed certain disclosures in the financial statements and the authority is in the process of finalizing additional disclosures to be made by insurers at periodical intervals,” the regulator stated.
Insurance companies now disclose salaries in a consolidated form. Though insurance companies disclose the remuneration of MDs and CEOs in their annual reports, they do not contain details on the pay of key officials such as chief investment officer, chief risk officer and chief actuary. Moreover, incentives paid to key management persons are also typically not included. Further, insurers should provide details of remuneration paid to independent directors. “All pecuniary relationships or transactions of the non-executive directors vis-a-vis the insurance company shall be disclosed in the annual report,” IRDAI said.
Financial performance including growth rate and current financial position of the insurer should also be disclosed, it said. The new guidelines are however not applicable for reinsurance companies andbranches of foreign reinsurers in India.
Incidentally, MFs have started disclosing details on executive pay only now. MFs were not disclosing the remunerationpaid to its star fund managers. They started to disclose compensation paid to key managerial personnel (KMP), which includes the MD only recently.
Interestingly, KMP included the MD and CEO, CFO (chief financial officer) and the company secretary and not the CIOs who run the fund management business. But following the SEBI diktat they have started providing information on the pay of CIOs and all those whose remuneration is above Rs. 60 lakh per year. The information for 2015-16 was made available early this month.
Date: 27th May,2016
Source: The Times Of India (Business)