PB Fintech Shares Crash 34%, Turtlemint Hits Lower Circuit as IRDAI Proposes Commission Reforms

Shares of insurance distribution platforms PB Fintech and Turtlemint witnessed heavy selling pressure on Thursday after the Insurance Regulatory and Development Authority of India (IRDAI) proposed sweeping changes to insurance distribution economics, raising concerns about the future earnings prospects of intermediaries. PB Fintech, the parent company of Policybazaar, plunged 34 per cent to close at Rs 1,244.50, compared to its previous close of Rs 1,886.30.

The stock had gained 4.5 per cent in the previous session. Turtlemint shares also came under severe pressure and ended the day 20 per cent lower at Rs 109.04 apiece. The sharp decline followed the release of IRDAI's consultation paper titled “Recalibrating Economics of Insurance Distribution”, which proposes significant changes to commission structures, distribution expenses, market conduct practices and transparency norms across the insurance sector.

The regulator has suggested linking commission payouts to the complexity of products and the effort required to sell them. It has also proposed lower commissions for products sold through open-architecture channels such as brokers and banks, which account for a substantial share of health, motor and life insurance sales. The proposals include capping commissions across several product categories.

Mandatory insurance products, such as third-party motor insurance, could attract little or no commission. For banks and lenders selling insurance products alongside loans, commissions are proposed to be capped between 2 per cent and 5 per cent depending on the product category. The regulator has also proposed banning the compulsory bundling of insurance with credit products. Health insurance distribution could see major changes under the proposed framework.

Commissions on new health insurance policies are proposed to be capped at 15-20 per cent, while commissions on renewals and policy porting would be limited to 5-10 per cent. Motor insurance commissions are proposed to be capped at 5-10 per cent for personal accident cover. In life insurance, the consultation paper recommends capping first-year commissions between 5 per cent and 20 per cent depending on the tenure of the policy. It also proposes spreading life insurance commissions over multiple years rather than concentrating payouts in the first year.

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