Paytm General Insurance: Paytm withdraws general insurance licence application; to focus on distribution-only model

Paytm General Insurance Ltd (PGIL), an associate company of One 97 Communications Ltd, has withdrawn its general insurance license application with the Insurance Regulatory and Development Authority of India (IRDAI), the company said in a filing with the stock exchanges on SaturdayWith this, the Noida-headquartered fintech company will look at a distribution-only model for general insurance. On Wednesday, during a post-earnings analyst call, Paytm had announced it was moving its small-ticket personal loan business to a distribution-only model as well.

Paytm also said that the move to withdraw the application for a general insurance licence will allow the parent company to conserve Rs 950 crore in cash, which was earmarked for investment in PGIL.

In May 2022, One 97 Communications Ltd’s board of directors had approved a proposal to increase the company’s stake in PGIL to 74% from 49% and subsequently apply for a general insurance licence. The remaining stake is held by founder Vijay Shekhar Sharma-owned VSS Holdings Pvt Ltd.

The move to apply for a general insurance licence organically in 2022 had come after Paytm called off its two-year-long bid to acquire Raheja QBE General Insurance.

On Saturday, the company said that its wholly owned subsidiary Paytm Insurance Broking Pvt Ltd, will increase its focus on distributing insurance to Paytm consumers, small merchants and small and medium enterprises. It added that it aims to offer small-ticket insurance products across categories such as health, life, motor, shop and gadgets.

“By focusing on small-ticket general insurance offerings and leveraging the strength of Paytm’s distribution, we are committed to increase general insurance penetration to a wider audience,” a Paytm spokesperson said in a statement.Also read: Paytm expects near-term impact on revenue, profitability due to regulatory action: Vijay Shekhar Sharma

Additionally, Paytm has strengthened its partnerships with insurance companies such as Digit, Acko, ICICI Lombard, New India, Bajaj Allianz, Tata AIG, Aditya Birla Health, and Universal Sompo to grow its insurance distribution segment.

In the quarter ended March 2024, Paytm reported its losses widening to Rs 550 crore, compared to Rs 169 crore in the same quarter last year. Its revenue from operations in the reporting quarter fell 3% year-on-year to Rs 2,267 crore, down from Rs 2,334 crore in the same quarter of the previous year.

The March quarter saw partial impact of the Reserve Bank of India’s action against Paytm Payments Bank on One 97 Communications’ financials.

Also read: Paytm witnesses slowdown in core businesses of merchant payments, consumer lending