Indian digital payments platform Paytm has finally given up its corporate agency licence in exchange for a brokerage licence to enter the insurance sector more directly than before. Paytm’s subsidiary, Paytm Insurance Broking, has received the licence from the Insurance Regulatory and Authority of India (IRDAI).
Brokers are intermediaries between prospective customers and providers, whereas a corporate agent is just selling policies on behalf of the insurance provider. The company had been granted the composite corporate licence to sell health and insurance products. As per the norms, the licence was valid up to three years, between 2017 and 2020.
Paytm will now offer insurance in four categories — two-wheelers, four-wheelers, health and life. Besides this, the customers can also avail policy management and claim settlement at select merchant points.
In a press statement, Paytm Insurance Broking said it will be offering innovative insurance products in a seamless manner. The company will be leveraging its 16 Mn merchant partner base to sell its insurance products all over the country. Besides this, the company wants to expand the reach of its products and empower the merchant by providing an alternate income source.
Amit Nayyar, President of Paytm, said, “Our entry into Insurance Broking is in line with our commitment to broaden our footprint into financial services and offering numerous and customized choices to millions of our customers. This would enable us to offer a wider suite of product offerings from a large set of insurance partners. The potential of the insurance business is huge as the market is still under-penetrated in India. Paytm Insurance is going to give millions of our users the option of buying bite-sized insurance products at a competitive price.”
The company had started partnering with insurance companies back in 2015. It started off with ICICI Prudential Life, Religare Health, Reliance Life and Reliance General to assist customers in paying premiums through mobile and wallet. ICICI Prudential was the first insurer to go live on Paytm’s platform. The company partnered with additional 15 companies over the next year to expand its services.
Paytm highlighted that it has already tied up with 20 insurance companies and is now planning to get an additional 30 companies over the next few weeks.
In 2018, Paytm had also incorporated two insurance companies — Paytm Life Insurance Corporation Ltd and Paytm General Insurance Corporation Ltd. The two companies were in direct competition of Bajaj Allianz, Aviva, United, HDFC, LIC, Future Generali and others. As per the ministry of regulatory filing of 2018 accessed by Inc42, Sharma, Shankar Prasad Nath and Madhur Deora were the three signatory stakeholders in the company.
Along the way, the company also incorporated Paytm Money to cover the spectrum of wealth management and add more offerings for investments.
As per the media reports of July 2019, Paytm was in talks to acquire Mumbai-based online insurance tech startups Coverfox for $100-$120 Mn in an all-cash deal. However, this news was not confirmed. If the deal was successful, then Paytm would have become a direct and the biggest competitor of PolicyBazaar, which is also funded by SoftBank. The common denominator of SoftBank did pose a hurdle for the deal. But Paytm has managed to get what it wanted without the acquisition through the brokerage licence.