Paytm General Insurance (PGIL), an affiliate of One97 Communications, has decided to withdraw its application for registration as a general insurance company with the Insurance Regulatory and Development Authority of India (Irdai).
The Noida-based company announced its shift in focus towards the insurance distribution portfolio established by Paytm Insurance Broking (PIBPL), opting to move away from developing its own general insurance products.
This strategic move will allow One97 Communications (OCL) to save Rs 950 crore initially earmarked for investment in PGIL. Initially, in May 2022, the company had planned to invest this amount in PGIL over a ten-year period. In alignment with this plan, OCL’s board had sanctioned an increase in the firm’s stake in PGIL to 74 per cent from the previous 49 per cent in the same month.
"PGIL, as an associate entity of One97 Communications, will be shifting its focus away from the capital-intensive insurance manufacturing business and withdrawing its general insurance license application," the company stated in a release.
This pivot towards distribution of insurance products mirrors the company’s recent decision to adopt a distribution first model for its lending products, particularly small ticket personal loans. These strategic shifts in various business verticals, including lending and insurance, follow regulatory scrutiny faced by Paytm Payments Bank, an associated entity of Paytm, by the Reserve Bank of India (RBI) in January of the same year.
Presently, the firm is concentrating efforts on expanding its insurance distribution network, encompassing health, life, motor, shop and gadgets coverage. To this end, Paytm has forged partnerships with leading insurance firms such as Digit, Acko, ICICI Lombard, New India, Bajaj Allianz, TATA AIG, Aditya Birla Health and Universal Sompo, among others.
Meanwhile, PIBPL specialises in embedded insurance products, offering coverage for health, life, vehicles, mobile screen damage, cyber fraud losses, EMI protection and job loss. The company extends insurance coverage to merchants across India, including shop, business interruption and health insurance.
"Aiming to enhance general insurance penetration among a wider audience, Paytm is committed to offering small-ticket general insurance offerings and leveraging the robust distribution network of Paytm," a spokesperson for the company stated.
Despite reporting a wider consolidated loss of Rs 549.6 crore in the fourth quarter (Q4) of 2023-24 (FY24), compared to Rs 168.4 crore in the same quarter of the previous year (2022-23/FY23), Paytm remains focused on its strategic realignment. Sequentially, the loss doubled from Rs 219.8 crore in the third quarter (Q3) of FY24.
