Kotak Institutional Equities said that if the recent proposals from IRDA are implemented, there would be greater clarity on the commission received by PB Fintech (PolicyBazaar) from its insurance partners, which are currently booked under various heads.
This, the brokerage said, will provide greater insight into the business of PolicyBazaar and enhance the Street’s confidence on the business model.
Kotak said that IRDA has proposed to remove commission cap on various insurance products while providing significant discounts to increase the scope of distributors. At the margin, it said, it improves the negotiating power of distributors, even as most existing distribution arrangements are driven by fair considerations.
Kotak said distribution of insurance policies is complex and requires access, education, nudge and sales motivation.
While a few distributors provide last mile access to the customer, corporate partnerships including banks and Policybazaar play a more extensive role in educating, motivating and managing a large sales fleet.
“This significantly reduces the burden on the insurance company which can focus on product, channel/partnership and risk management but involves higher expenses to the distributor. Restrictions on payments, hence indirectly hampering the role of distributors is,” it said.
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