Insurance Regulatory and Development Authority
Circular Ref: IRDAI/F&I/CIR/MISC/26/01/2023 Dated: Date: 30th January, 2023
To: The Chairman/CEOs of all insurance companies;
Profit Related Commission to Non-Executive Director(s)
The Authority, vide Circular IRDAI/F&I/CIR/MISC/183/9/2022 dated 2nd September, 2022, has simplified the process for appointment/continuation of common director(s) u/s 48A of Insurance Act, 1938.
2. Clause 3(a)(iii) of the said Circular provides that “Insurer shall not pay any remuneration to non-executive directors without prior approval of the Authority. However, insurers are permitted to pay sitting fees, as per applicable norms.”
3. As a step towards further simplifying the processes, the Insurers are hereby permitted to pay profit related commission to non-executive director(s) including the non-executive director(s) appointed under section 48A of the Insurance Act, 1938, under the deemed approval mechanism, subject to the following conditions:
a. The insurer has reported positive profit after tax for the period for which the said commission is proposed to be paid.
b. The Board of the insurer has passed the resolution approving such payment.
c. The amount of payment of remuneration in the form of profit related commission to each of the Non-Executive Director shall not exceed the limits specified in the Guidelines on Remuneration of Non-Executive Directors and Managing Director /Chief Executive Officer / Whole-time Directors of Insurers, as amended from time to time.
d. Disclosures with regard to said payment shall be made in the financial statements for the respective financial year.
e. The insurer shall comply with all other applicable laws in this regard.
4. The provisions of this Circular are applicable with immediate effect.
(Mamta Suri)
Executive Director
