Lower commissions could push Policybazaar into insurance manufacturing: Yashish Dahiya
“I never wanted to be in manufacturing, but I think now this (proposal) has almost forced us to (do that),” PB Fintech cofounder and group chairman Yashish Dahiya said during an investor call on Thursday.
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The company said lower distribution commissions could alter the economics of its existing model and make insurance manufacturing a more relevant strategic option. Under the commission framework proposed by the Insurance Regulatory Authority of India (Irdai), there would be product-level commission caps. In general insurance, the proposed first-year commission on individual health policies is 15% against the prevailing commission of around 30% for distribution entities and 20% for agents. Renewal and portability commissions are proposed to be capped at 5% and 10%, respectively. Dahiya termed the Irdai proposals “quite extreme”.
PB Fintech’s management said a distributor with a large customer base could have an advantage if it eventually entered manufacturing, as it would already have access to a sizeable distribution network. However, the company said the economics would need to work for both itself and its partners.
