IRDAI Proposes Single Management Expense Limit For Insurers
IRDAI proposed a single management expense limit of 30% of GMP for general insurers and 35% for standalone health insurers.
IRDAI on Wednesday proposed a single management expense limit of 30% of gross premium written in a financial year in the case of general insurers and 35% for standalone health insurers.
Currently, there are segmental and sub-segmental management limits for insurers.
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, chief executive officer, whole-time directors and key management persons for the financial year in which the actual expenses exceed the projected expenses by more than 10%.
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% incremental premium over the previous year towards rural sector business and government schemes.
It also talks about additional allowable expenses up to 15% of the premium for Pradhan Mantri Jeevan Jyoti Bima Yojana.
Insurance Regulatory and Development Authority of India has invited comments on the two draft regulations by Dec. 14.