Policybazaar Warns of Major Business Disruption Due to Potential Commission Caps
Commission caps to pose existential threat to insurance distributors: Policybazaar’s Yashish Dahiya
The Economic Times
Image: The Economic Times
Policybazaar's chairman Yashish Dahiya cautions that proposed commission caps by the Insurance Regulatory and Development Authority of India (IRDAI) could threaten the company's business model. The firm may consider obtaining an insurance manufacturing license if regulations disrupt its distribution business.
- 01Yashish Dahiya highlighted that commission caps could fundamentally alter the business economics for insurance distributors.
- 02The IRDAI is expected to release a draft proposal for commission caps later this month, following discussions initiated by the government in January 2026.
- 03PB Fintech, which operates Policybazaar, reported a profit of nearly ₹650 crore last year, with only about ₹300 crore from core operations after adjusting for interest income.
- 04The company facilitated approximately ₹30,000 crore in insurance premiums, yielding a profit margin of around 1%.
- 05Dahiya noted that the company might explore operating as a managing general agent (MGA) if the commission caps are implemented.
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Yashish Dahiya, chairman of PB Fintech, which operates Policybazaar, expressed concerns that potential commission caps from the Insurance Regulatory and Development Authority of India (IRDAI) could pose an existential threat to the company. Although the IRDAI has not yet proposed any caps, it is reportedly drafting rules to limit commissions paid to distributors. Dahiya indicated that if the distribution business is disrupted, the company might consider obtaining an insurance manufacturing license. Despite the uncertainty, he believes that Policybazaar plays a crucial role in increasing insurance penetration among young customers in India. Last year, the company reported profits of nearly ₹650 crore, with around ₹380 crore from interest income, and facilitated approximately ₹30,000 crore in insurance premiums. Dahiya warned that significant regulatory changes could lead to disruptions lasting three to six months. The company's shares have fluctuated recently, closing at ₹1,646.30, with a market capitalization of about ₹76,400 crore.
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Proposed commission caps could disrupt the business model of insurance distributors, affecting their profitability and operational strategies.
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