homefinance NewsPB Fintech to take on Bima Sugam — requests IRDAI to allow Policybazaar to reduce commission rates
PB Fintech to take on Bima Sugam — requests IRDAI to allow Policybazaar to reduce commission rates
CNBC-TV18 learns from sources that PB Fintech, the owner of Policybazaar, has reached out to the insurance regulator to allow Policybazaar to reduce the commission on the platform or try to match it with the lower commission's that Bhima Sugam is expected to have.
PB Fintech, the owner of Policybazaar, has requested Insurance Regulatory and Development Authority (IRDAI) to allow them to reduce commission rates, while seeking allowance on matching lower commissions as Bima Sugam, sources informed CNBC-TV18.
These insurance aggregators could face the heat with the entry of Bima Sugam, which will be responsible for sales, servicing, and claims of insurance policies, possibly everything that Policybazaar does.
IRDAI had proposed the formation of Bima Sugam, an aggregator-like platform for insurance sales and related services. Industry feedback suggests that this platform is likely to charge commissions at a much lower rate than current levels.
This could be 1/4 of the commission, which in the current market has been paid to aggregators like Policybazaar or for that matter agents.
Why is it not being able to do so far?
That's because any sort of benefits given to policyholders in terms of the reduced commission is considered as rebates and rebates as per the current regulations are not allowed.
So, even if Policybazaar reduces the commission it will receive less from the insurance company, but it can't pass on the benefits of that reduced commission to policyholders.
PB Fintech, however, declined to comment on CNBC-TV18’s query regarding the story.
What is Bima Sugam and how will it work?
It’s an Amazon-like platform where all life and general insurance policies will be listed. Bima Sugam will be responsible for sale, servicing and claims coming from these insurance policies.
Who can buy insurance policies from the Bima Sugam?
Aggregators like PolicyBazaar, brokers, banks and insurance agents will act as facilitators or bridges in terms of selling insurance policies through Bima Sugam to individuals.
Individuals can also buy life, motor or health insurance policy through Bima Sugam.
(Edited by : Anshul)
First Published: Nov 15, 2022 3:42 PM IST
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