Policybazaar Insurance Brokers, a subsidiary of PB Fintech, has become a composite insurance broker after getting the final approval from IRDAI. This will allow the company to sell reinsurance products and expand its reach in the insurance sector.
What is reinsurance and why is it important?
Reinsurance is the practice of insurers transferring portions of their risk portfolios to other parties to reduce their exposure to claims. Reinsurance helps insurers to increase their underwriting capacity, diversify their risk, and stabilize their financial results.
Reinsurance is especially important for the Indian insurance market, which is facing challenges such as low penetration, high competition, rising claims, and regulatory changes. Reinsurance can provide support and stability to the insurers, as well as create more opportunities for innovation and growth.
How did Policybazaar get the composite broker license?
Policybazaar, which is a wholly owned subsidiary of PB Fintech, had earlier received the in-principle approval from IRDAI for the license upgrade in February 2024. The company had applied for the composite broker license in November 2023, after completing 10 years of operations as a direct insurance broker.
The composite broker license will enable Policybazaar to deepen the insurance penetration in the country by bringing more technology, process control and data analytics based innovation into reinsurance capacity. The company aims to become a global hub for reinsurance products and services, catering to both domestic and international markets.
The final certificate of registration from IRDAI was handed over to Policybazaar’s co-founder and CEO Yashish Dahiya by IRDAI Chairman Subhash Chandra Khuntia in a ceremony held in New Delhi on March 4, 2024.
What are the benefits and challenges for Policybazaar as a composite broker?
As a composite broker, Policybazaar can now sell reinsurance products, in addition to life and general insurance products, through its platform. This will allow the company to offer a wider range of products and services to its customers and partners, as well as tap into new revenue streams.
Policybazaar can also leverage its expertise and experience in the insurance domain, as well as its large customer base and data analytics capabilities, to create innovative and customized reinsurance solutions for the insurers. The company can also benefit from the growing demand for reinsurance in India and abroad, as the insurance sector evolves and faces new risks and opportunities.
However, Policybazaar will also face some challenges as a composite broker, such as complying with the regulatory norms and guidelines for reinsurance broking, maintaining its competitive edge in the crowded online insurance space, and managing the expectations and interests of its various stakeholders.
What are the future plans and prospects of Policybazaar?
Policybazaar has been disrupting the insurance industry since its inception in 2008, by providing an online platform for consumers to compare and buy various insurance products from different insurers. The company claims to have over 100 million visitors annually and sell over 1.5 million policies every month. Policybazaar is also backed by marquee investors such as SoftBank, Tiger Global, Temasek, Info Edge, Premji Invest, among others.
PB Fintech, the parent company of Policybazaar, had recently reported its first ever net profit of Rs 37.2 crore on a revenue of Rs 871 crore for the quarter ended December 31, 2023. The company had also filed its draft red herring prospectus (DRHP) with SEBI in July 2023, for its proposed initial public offering (IPO).
The company plans to use the proceeds from the IPO for expanding its operations in India and overseas, investing in technology and infrastructure, enhancing its brand awareness, and meeting its working capital requirements.
Policybazaar also has ambitious plans to grow its reinsurance business and become a global leader in this segment. The company intends to partner with leading reinsurers across the world and offer them access to the Indian insurance market. The company also plans to explore new markets such as Southeast Asia, Middle East, Africa, and Latin America for its reinsurance offerings.
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