PB Fintech expects India's proposed caps on insurance commissions to severely affect its non-life insurance business, which may lead to spending cuts and a slowdown in hiring, co-founder and group CEO Yashish Dahiya told analysts on Thursday.
Shares of Indian insurance distributors and lenders with sizeable insurance distribution income fell following the news, led by a 36% plunge in PB Fintech, the parent of insurance platform Policybazaar.
The stock recorded its biggest one-day fall, wiping out more than 314 billion rupees ($3.27 billion) in market capitalisation.
The proposals, set out in a consultation paper released on Wednesday, would reintroduce commission caps across life, health and motor insurance that the Insurance Regulatory and Development Authority of India scrapped in 2023.
The reforms aim to lower policy costs and curb mis-selling. However, analysts said these could disrupt established distribution models and weigh on growth in an industry that relies heavily on agents and banks to sell policies.
PB Fintech said it would respond by managing costs more closely and focusing on profitability.
"In terms of general insurance, it is between one-third to 40% of what we have today. So that's a very serious impact on revenue," Dahiya said, adding that the company would reassess spending.
"There may be opportunities for rationalisation in digital marketing, brand spending, sales and customer support."
The company may also explore new revenue streams and, over the longer term, consider entering insurance manufacturing, Dahiya said.
"It becomes a little harder for me to justify not having a manufacturing entity of my own because this somewhat takes away the trust in the fact that distributors would be rewarded for the quality of business they create."
PB Fintech said it would not resort to mass layoffs but could slow hiring. The company hired about 6,000 people in the first half of the year, Dahiya said, adding that it might have hired closer to 2,000 had the rules been known earlier.
"We run the company for long-term growth and we will calibrate that growth to the new reality."
The company could seek to monetise its hospital and garage networks, along with technology, underwriting and claims-related services, he said.
PB Fintech expects no impact in fiscal 2027, but fiscal 2028 could be a potential period of "challenges and discovery," if the new rules come into force by then.
