health insurers: General, health insurers face a single management expense limit

The Insurance Regulatory and Development Authority of India (IRDAI) has 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 for managing directors, chief executive officers, 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.