Commission caps to pose existential threat to insurance distributors: Policybazaar’s Yashish Dahiya

Online insurance distributor Policybazaar expects a major disruption in its business if the Insurance Regulatory and Development Authority of India (IRDAI) brings in caps on distributor commissions, as it says the move can fundamentally alter the economics of the business.

Yashish Dahiya, the group chairman of PB Fintech that runs insurance marketplace Policybazaar, said the company could evaluate an insurance manufacturing licence that will allow it to design, underwrite and sell policies, if its core distribution business gets disrupted by regulatory moves.

However, such conversations have not been taken up by the publicly listed company’s board, he told ET.


“We still believe that while there is a lot of noise, eventually the wrong thing will not happen. Now it's important to define what the wrong thing is,” Dahiya said.

While the IRDAI has not officially proposed any caps yet, it is reportedly working on proposals to limit commissions paid by insurers to distributors such as Policybazaar, with a draft expected later this month. The issue came up in January 2026 after the government amended the Insurance Act and gave power to the regulator to cap commissions.

The issue of such caps is not new. It was discussed a few years back as well, but eventually, in 2023, the IRDAI issued revamped commission regulations, giving insurers greater flexibility in designing commission structures, provided they remained within an overall expense management framework. The move shifted the industry away from strict product-specific commission caps to board-approved expense frameworks. However, the regulator has found that most of the companies breached the prescribed limits in FY25. On January 6, ET reported that a committee was reviewing these guidelines.

While Dahiya said the company has made representations to the regulator about why such caps could be detrimental for the industry, he added that there is no clarity on the matter yet.

ET reported in February that PB Fintech was looking to operate as a managing general agent (MGA)—a different class of intermediary—once the IRDAI released the application framework. With the proposed commission rules potentially affecting its core business, Dahiya said that remains one of the options under consideration.

“I think there are many solutions. You could be an insurance company. You could be an MGA. You could be many things…I don't know how it will eventually appear,” he said.

He added that the industry could face disruptions for three to six months after the proposed rules come into effect.

Given the scale at which PB Fintech operates, Dahiya is of the opinion that Policybazaar will be part of the solution and not the problem.

PB Fintech is playing a crucial role in bringing young customers within the fold of insurance, a sector which is heavily underpenetrated in the country, he said. But insurance distributors are not hugely profitable, he said.

Last year, PB Fintech reported nearly Rs 650 crore in profit, with Rs 380 crore coming through interest income.

“This year, after adjusting for interest income, our profit is still under Rs 300 crore. We facilitated about Rs 30,000 crore of insurance premium. Ultimately, our profit is around 1%,” he explained.

Using the business numbers as context, Dahiya said if something major is done by the regulator, it could be an existential issue for the likes of PB Fintech.

For the January-March quarter, PB Fintech reported operating revenue of Rs 2,061 crore, up 36% year-on-year, driven primarily by growth in new insurance premium collections, the group's core business. Net profit rose 54% to Rs 261 crore from Rs 169 crore a year earlier.

PB Fintech's shares, which largely stayed below the issue price until early 2023 after its November 2021 listing, rallied strongly over the next two years before peaking to Rs 2,215.85 in January 2025. Since then, it has largely traded within a range. It is down more than 11% over the past six months.

On Tuesday, the shares ended trading 1.4% down at Rs 1,646.30 on the BSE, giving the company a market capitalisation of about Rs 76,400 crore.

Dahiya and Policybazaar cofounder Alok Bansal together sold a 0.8% stake in the company for Rs 665 crore last Friday. While Dahiya sold shares worth Rs 455 crore, Bansal offloaded stock worth Rs 210 crore.