Policybazaar, Turtlemint Feel The Squeeze
Riya, 27, wants to buy her first family-floater health cover on Policybazaar. But before she sees a single price, the…
Policybazaar and Turtlemint are facing a significant challenge as the Insurance Regulatory and Development Authority (IRDAI) aims to reinstate commission caps for health, term (life) and motor insurance products. This move comes in response to the rapid increase in payouts to distributors, which grew by 125% from FY23 to FY25, while new business premiums only rose by 28% in the same period.
The IRDAI believes that commissions and payouts have outpaced premium growth, creating an unsustainable high-cost model in the insurance industry.
Policybazaar, a major player in the digital insurance space, recently reported a nearly doubled YoY net profit and a 40% YoY increase in operating revenue. However, if the IRDAI's proposed commission caps are implemented, Policybazaar's blended take-rate on core online insurance could see a 33%-50% drop, according to brokerage Jefferies.
Analysts believe that this change could be a long-term benefit to the insurance industry, as insurers could pass on the savings to customers, potentially lowering premiums and bringing more individuals into the insurance net.
The IRDAI's main concern is the practice of distributors seeking personal details of prospective customers before revealing policies, terms, and pricing, labeling it a "dark pattern" and mis-selling. The regulator is particularly focused on capping commissions on renewals, as renewal revenue hit ₹1,003 Cr in Q1 FY27, up 55% YoY, and is expected to be the highest-margin revenue stream for Policybazaar.
The management of Policybazaar acknowledges that the immediate impact from the proposed IRDAI guidelines is quite severe, but they also stated that the stock erosion might be overblown.
Written by urgent.news from Inc42's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
