The company will shift its focus from producing insurance products to emphasizing its insurance distribution portfolio.
Paytm General Insurance Limited (PGIL), affiliated with One97 Communications, has retracted its application for registration as a general insurance company with the Insurance Regulatory and Development Authority of India (IRDAI).
The Noida-based firm stated it will prioritize the insurance distribution portfolio established by Paytm Insurance Broking Private Limited (PIBPL), transitioning away from manufacturing its own general insurance products for users.
Paytm General Insurance Shifts Focus to Distribution, Forgoes Manufacturing Sector
This decision will allow One97 Communications Limited (OCL) to retain Rs 950 crore initially earmarked for investment in PGIL.
In May 2022, the company unveiled its intention to invest the sum in PGIL gradually over a decade. OCL’s board had sanctioned augmenting the firm’s ownership in PGIL from 49% to 74% during the same period.
“In a statement, the company announced that PGIL, an affiliate of One97 Communications, will shift its attention from the resource-intensive insurance manufacturing sector and retract its application for a general insurance license.”
“The emphasis on distributing the insurance portfolio aligns with the company’s choice to prioritize a distribution-centric approach for its lending products like small-ticket personal loans.”
The shift in strategies across business sectors like lending and insurance follows the Reserve Bank of India’s (RBI) crackdown on the firm’s affiliate, Paytm Payments Bank, in January.
Currently, the company is concentrating on intensifying its distribution of insurance products covering health, life, motor, shop, and gadgets.
The company has collaborated with insurance providers such as Digit, Acko, ICICI Lombard, New India, Bajaj Allianz, TATA AIG, Aditya Birla Health, Universal Sompo, and others.
Meanwhile, PIBPL furnishes integrated insurance products covering health, life, vehicle, mobile screen damage, cyber fraud loss, EMI protection, and job loss. It extends insurance coverage to merchants nationwide, encompassing shop, business interruption, and health insurance.
“Aiming at expanding general insurance reach to a broader audience through small-ticket offerings and harnessing Paytm’s distribution prowess,” stated a spokesperson for Paytm.
In the fourth quarter (Q4) of 2023-24 (FY24), Paytm reported a wider consolidated loss of Rs 549.6 crore, compared to Rs 168.4 crore in the corresponding period of the previous fiscal year (2022-23/FY23). Sequentially, the loss doubled from Rs 219.8 crore in the third quarter (Q3) of FY24.
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