Lower commissions could push Policybazaar into insurance manufacturing: Yashish Dahiya
PB Fintech is evaluating the possibility of entering insurance manufacturing as distribution commissions may decrease significantly. The proposed commission caps by the Insurance Regulatory Authority of India could impact the economic viability of their current distribution model. While these changes might make manufacturing more attractive, the company emphasizes the need for regulatory clarity.…
India's insurance regulator Irdai has proposed changes to distribution commissions that could force Policybazaar, a leader in insurance distribution, to reconsider its business model. Current commissions are significantly lower for distributors compared to agents, with health policy commissions expected to drop from around 30% to just 15% in the first year.
This shift could make it economically viable for Policybazaar to transition into insurance manufacturing, where they would design, underwrite, and sell policies themselves. Yashish Dahiya, cofounder and group chairman of Policybazaar's parent company PB Fintech, admitted that the proposal has made the company reconsider its path, despite previously having no interest in manufacturing.
He emphasized that the company would need more regulatory clarity before making a final decision. The proposed changes could level the playing field, giving distributors with extensive customer bases an advantage if they eventually entered manufacturing. However, PB Fintech's management noted that the economics for both the company and its partners would need to align for such a move to be feasible.
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