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Article | Executive Pay Memo North America

Incentive payouts, merit increases and technology talent trends

By Shannon Williams , Max Fogle , Jason Hardy and Derek Mordente | June 2, 2022

Insurers funded 2021 incentive payouts and salary increases at higher levels and heightened their focus on technology talent. 
Executive Compensation

WTW surveyed insurers on annual incentive plan (AIP) and long-term incentive (LTI) funding for performance cycles ending in 2021. A total of 72 participants — 40 life & annuity (L&A) insurers and 32 property & casualty (P&C) insurers — gave insight into their incentive plan payouts and base salary increase budgets as well as their approaches to attracting, retaining and motivating technology talent.

Incentive payouts

Annual incentive plan

Median payouts were significantly higher for L&A companies than P&C companies for 2021 (141% and 105%, respectively).


  • The median payout was 31 percentage points higher than observed in last year’s survey on 2020 funding (last year’s median was 110%).
  • 40% of companies funded between 150% and 250%.
  • Less than 10% of companies were below target.


  • The median payout was directionally in line with that of recent years.
  • Annual payout scores were more distributed among P&C companies than L&A companies.
  • 70% of companies paid at or above target, including 17% that funded between 150% and 250%.

Approximately 50% of the total survey sample reported their AIP funding was 21% or higher for 2021 than 2020. Although a higher percentage of L&A companies reported higher funding for 2021, more than half of P&C companies also reported higher funding levels (78% and 58%, respectively).

Long-term incentive plan

Median payouts for plans ending in 2021 for both L&A and P&C companies were significantly above those reported in our 2020 survey.


  • The median payout was 135%.
  • Approximately one-third funded between 150% and 250%.
  • 21% paid below target.


  • The median payout was 119%.
  • Similar to L&A companies, approximately one-third of P&C companies funded between 150% and 250%.
  • 20% paid below target.

Use of discretion
  • AIP versus LTI: As is typical, use of discretion was more prevalent for AIP than for LTI (19% and 5%, respectively).
    • AIP: Of those that used discretion, positive discretion was more likely, with eight reporting a positive adjustment (with an average increase of 10.4 percentage points) and five reporting a negative adjustment (with an average decrease of 13.2 percentage points).
    • The prevalence for the use of discretion for both AIP and LTI funding were below those reported in our 2020 survey (33% and 11%, respectively, in 2020), as the impact of COVID-19 in 2020 normalized somewhat in 2021.
Base salary increase budget movement

For 2021, 60% of participants indicated a merit increase budget of more than 3%.

  • Compared with historical prevalence of a 3% base salary increase budget, the median for P&C and L&A companies was approximately 3.5% and 3.4%, respectively.
  • There were few outliers on the low side: The lowest merit increase budget for the total sample was 2.5%; only 6% of P&C and 10% of L&A companies reported merit increase budgets below 3%.
  • There was significant prevalence on the high side: More P&C companies reported base salary increases of 5% or more than L&A companies (18% and 8%, respectively).

Technology talent

Approximately 50% of the total sample reported they are using enhanced sign-on bonuses or retention awards to attract and retain technology talent. The increased use of “top talent” awards reflects the growing pressure insurance companies feel to compete directly with technology companies (and the importation of tech company pay strategy). While some companies have taken more systematic approaches to rewarding tech talent (i.e., differentiated salary structure/targeted positioning/pay mix), opportunities exist to further segment employee populations and maximize the impact of Total Rewards offering.

A significant sample of companies are also looking outside the traditional external labor market for talent, by reskilling and upskilling their current workforces, leveraging third-party software/talent sources or acquiring/partnering with other companies for this talent.

Compensation-related actions
Compensation-related actions

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This year’s survey responses from the insurance industry on payouts, salary budgets and attraction/retention strategies for technology talent reflect what many of our clients are experiencing: a talent market that is the most competitive in a generation or more. Insurers are responding to those pressures with enhanced pay outcomes and innovative talent approaches. WTW is supporting the industry in these efforts, as the focus turns to salary and incentive design for 2023 and beyond.


Senior Associate, Executive Compensation & Board Advisory (New York)
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Director, Executive Compensation & Board Advisory (New York)
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Senior Associate, Work and Rewards (Dallas)
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Director, Executive Compensation & Board Advisory (New York)
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