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Insurance Giant Swiss RE May Join IPO-Bound Paytm’s Board With $100 Mn Infusion

Insurance Giant Swiss RE May Join IPO-Bound Paytm’s Board With $100 Mn Infusion

Swiss RE is reportedly looking to acquire a 20-25% stake in the venture by initially making a capital commitment of around $100 Mn

Currently, Paytm awaits IRDAI approval on its 100% acquisition deal with Mumbai-based private sector general insurer Raheja QBE

Overall, the insurance industry in India is estimated to reach $250 Bn by 2025

Switzerland-based reinsurance and insurance giant Swiss RE may reportedly join the board of IPO-bound digital payments startup Paytm’s Insurance business.

Swiss RE is looking to acquire a 20-25% stake in the venture by initially making a capital commitment of around $100 Mn, according to ET.

While this may not be Paytm’s first tryst in the insurance segment, it will formalise its insurance business avenue. “Bringing on board a strategic partner at this point will add heft with the regulators. Paytm lacks insurance expertise which Swiss RE aims to provide. The deal could be strategic, as Swiss RE is expected to lend expertise to Paytm’s entry into the insurance business,” the report said.

A Look Into Paytm’s Insurance Journey

Paytm started its insurance journey back in 2015 by partnering with insurance company ICICI Prudential Life, which was the first insurer to go live on Paytm’s platform. The company partnered with 15 companies over the next year to expand its services.

These companies included Religare Health, Reliance Life and Reliance General to assist customers in paying premiums through mobile and wallet.

Later in 2018, Paytm also incorporated two insurance companies — Paytm Life Insurance Corporation Ltd and Paytm General Insurance Corporation Ltd. The two companies were in direct competition with Bajaj Allianz, Aviva, United, HDFC, LIC, Future Generali and others

In March 2020, Paytm Insurance Broking, a subsidiary of One97, let go of its corporate agency license and got a composite insurance broker license from the Insurance Regulatory and Development Authority of India (IRDAI) to provide insurance in four categories — two-wheelers, four-wheelers, health and life.

Cut to four months later, Paytm announced its 100% acquisition of Mumbai-based private sector general insurer Raheja QBE for INR 568 Cr — subject to regulatory approval from IRDAI. But the deal is still under process as it awaits approval.

The insurance tech space is growing in India along with the robust growth of fintech. According to a recent report by S&P Global, the Asia-Pacific region has over 335 private insurtech startups and China & India are collectively home to nearly half of the private insurtech companies in the APAC region.

According to an Inc42 report, the insurance tech segment is amongst the four fintech subsectors which had the highest CAGR (58%) between 2015-2020 (in terms of total funding). Overall, the insurance industry in India (across life, general and health) can be as large as $250 Bn by 2025, according to Invest India estimates.

Amid the IPO spree among new-age companies, Policybazaar, a leading insurance startup founded in 2008 has also filed for an INR 6,000 Cr IPO with the Securities and Exchange Board of India. Insurtech unicorn Digit Insurance has recently raised INR 121 Cr from TVS Growth Fund and RS Filmcraft.

Amazon India also ventured into the insurance distribution business by partnering with Acko, which may enter the unicorn club in its next round of funding.

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