PB Fintech is prepared to withstand any potential revenue impact from the Insurance Regulatory and Development Authority of India's (IRDAI) consultation paper on insurance commissions and mis-selling, its Co-founder & CEO Yashish Dahiya said, stressing that a large part of the Policybazaar's business remains independent of marketing-led sales.
Speaking exclusively to NDTV Profit, Dahiya said the company has been preparing for a zero-commission environment since its inception and believes at least 70% of its business would remain unaffected even under a severe scenario.
“We can handle any revenue impact. Since day one, we have been preparing for a zero-commission world. 80% of our sales come from our direct traffic,” Dahiya said.
He added that the company's dependence on marketing and contact centres could be significantly reduced without materially affecting its core business.
“When you look at our contact centre, 26% of our people lead to 70% of our sales. If I shut down all marketing and our contact centres have to be dramatically reduced, we would still be able to do 70% of our business. If there is a very harsh situation, we definitely survive and thrive,” Dahiya said.
Dahiya said Policybazaar's strong direct-traffic base gives it a structural advantage if the proposed regulatory changes alter the economics of insurance distribution.
According to him, the company does not need to spend heavily on marketing individual insurance products, which could help cushion any pressure on revenue arising from changes to commissions or distribution practices.
He said PB Fintech will also focus on cost reduction and could consider transitioning towards a commission-free platform as the regulatory framework evolves.
He welcomed the IRDAI consultation paper, arguing that the regulator's focus on curbing mis-selling is ultimately positive for the industry and customers.
“Mis-selling was a problem in insurance and has been high in savings insurance products,” he said
Dahiya said the market's negative reaction to the consultation paper was natural but maintained that the proposals should not be viewed as being targeted at insurance aggregators.
“The consultation paper is not against us. IRDAI is focused on reducing mis-selling,” he said.
He also said PB Fintech would have no contention with the regulator's choices and would comply with any decisions taken by the insurance regulator.
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