Shares of PB Fintech, the parent company of Policybazaar, are in focus after the Insurance Regulatory and Development Authority of India (IRDAI) raised concerns over high commission and distribution costs in the insurance sector. In a meeting with insurance CEOs, the regulator told insurers that such costs must come down in order to improve efficiency and ensure better value for policyholders, sources told CNBC-TV18.
Insurers, in response, have suggested a proposal to cap commissions on the lines of the mutual fund industry’s Total Expense Ratio (TER) model. They are likely to submit a detailed presentation to IRDAI on adopting such a model, which could significantly alter commission structures across the industry.
In addition, insurers have also suggested disclosing commission details in the policy documents to policyholders, a move aimed at boosting transparency in insurance sales.
For PB Fintech, a digital insurance aggregator, the regulatory stance could prove relevant as its business model relies on digital distribution and relatively leaner commission structures compared to traditional channels. Analysts say any move to rationalise commissions industry-wide could strengthen the competitive positioning of online platforms.
