Policy retention, dispute resolution and claims payments should count toward executive pay at South Korean insurers, according to a new Korea Insurance Research Institute (KIRI) report that also calls for malus, clawback and deferred-pay provisions across the sector.
KIRI research fellow Lee Seung-jun and researcher Moon Hye-jung released “Executive Performance Evaluation and Remuneration Disclosure at Overseas Insurers: Cases and Implications” on November 2. It calls for short- and long-term executive KPIs and pay centered on long-term performance.
The report follows a February 26 directive from the Financial Supervisory Service (FSS). At that meeting, Governor Lee Chanjin told the CEOs of 14 major insurers to build consumer protection indicators that cover the entire product life cycle into their KPIs. He also told them to link dispute-reduction strategies to compensation for executives and employees.
“In particular, consumer protection performance should be assessed not only through customer satisfaction and willingness to recommend (NPS), but also by considering claims payments, the appropriateness of policy retention, dispute resolution and long-term loss experience by product,” the researchers said.
Evaluations should also cover profitability, risk control, consumer trust, shareholder returns and coverage obligations, they said.
Retention is a live issue. In September 2026, the FSS halted sales of “700 whole life” policies, which refund 100% of premiums after seven years, because buyers could mistake them for savings products and mass surrenders could threaten insurer soundness. Premium income from these policies at 12 insurers hit ₩950 billion ($703 million) in 2025, up from ₩310 billion ($229.4 million) in 2024.
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At the February meeting, Lee also criticized “sales practices that rely on excessively high commissions.”
Regulators planned to phase in a revised sales commission regime from July 2026 and to hold general agencies (GAs) more accountable. Concerns had grown, however, over planner poaching and irregular incentive schemes.
The Financial Services Commission has also proposed adding GA channel risk to a rating framework whose grades can raise or lower an insurer’s K-ICS ratio.
“In particular, when adjusting earnings for compensation assessments, companies should clearly explain the reasons for the adjustments and assign responsibility, ensuring that losses resulting from past executives’ decisions are not excluded from performance evaluations. They should also provide the basis for those decisions,” the researchers said.
They also want longer evaluation periods, shareholding requirements and a framework that traces past decisions on underwriting, product development, actuarial assumptions and asset management to claims and investment outcomes.
Under the Executive Responsibility Mapping System, large insurers already had to name, by July 2026, the senior executives accountable for internal controls.
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The FSS said on November 3 it will hold large insurers’ CEOs accountable for hacking breaches, with fines of up to 3% of revenue planned, Seoul Economic Daily reported.
UK-based Aviva paid half of each short-term incentive in cash. It deferred the rest into shares that vested in equal installments over three years, plus dividend-equivalent shares. Long-term incentive shares were held for a three-year performance period plus two years.
Short-term incentives were 70% financial and 30% risk management, employee and customer experience measures. The 2025 common performance score was 189.3% of base salary, and individual awards were capped at 200% for the CEO and 150% for the CFO.
Long-term incentives were 80% three-year financial and shareholder performance and 20% non-financial. The non-financial share comprised Net Promoter Score (NPS) at 7.5%, carbon dioxide intensity reduction at 7.5%, racial diversity among senior executives at 2.5% and women in senior positions at 2.5%.
CEO Amanda Blanc received £9.764 million (about ₩17.5 billion or $12.95 million) in 2025, and CFO Charlotte Jones received £4.466 million (about ₩8 billion or $5.92 million). Performance-linked pay made up 85.6% and 80.8% of those totals, respectively.
At Prudential Financial, short-term incentives were 90% financial and 10% customer experience, which business-unit NPS surveys measured.
Long-term incentives were 75% performance shares and 25% restricted stock units conditional on continued employment. The performance shares were assessed over three years on relative return on equity and growth in adjusted book value per share, at 50% each.
CEO Andrew F. Sullivan’s 2025 compensation was $19.06 million (about ₩25.5 billion or $18.87 million), and 94% of it was performance-linked.
Domestic disclosures show smaller totals. Meritz Fire & Marine CEO Kim Joong-hyun received ₩2.97 billion ($2.20 million) for 2025, including a ₩2.45 billion ($1.81 million) bonus, Newsis reported. Samsung Life’s Hong Won-hak received ₩2.16 billion ($1.60 million), and Samsung Fire & Marine’s Lee Moon-hwa received ₩1.76 billion ($1.30 million).
Under a May 25, 2026 circular from the Insurance Regulatory and Development Authority of India, six mandatory parameters make up 50% of the variable pay assessment for senior management from FY27, according to Business Standard. The parameters include claims servicing and grievance redressal, and variable pay there also faces malus and clawback.
KIRI also wants pay disclosures that link weightings, targets, results, adjustments and final payments.
