PB Fintech rebounds after 36% slump; shares recover following analyst call — how other insurance stocks fare

A day after a brutal sell-off, shares of insurance companies, insurance distributors, and banking and financial services firms saw some recovery on Friday, September 25.

PB Fintech shares gained as much as 4.5% to hit a high of ₹1,261.70 on the NSE, a day after the stock nosedived 36% — its worst single-day fall on record.

Other insurance-linked stocks also witnessed heavy selling pressure on Thursday, with insurance distributors PB Fintech and Turtlemint Fintech among the worst hit, after the Insurance Regulatory and Development Authority of India (IRDAI) proposed changes to the commission structure and regulations governing insurance distributors.

The proposed changes have raised concerns over their potential impact on distributor revenues and the broader insurance distribution ecosystem, triggering a sharp sell-off across insurance and financial stocks.

What PB Fintech said in analyst call

However, the company said it would wait for greater regulatory clarity on the proposal before taking any decision.

PB Fintech said lower distribution commissions could alter the economics of its existing business model and make insurance manufacturing a more relevant strategic option.

Under the commission framework proposed by the Insurance Regulatory and Development Authority of India (IRDAI), there would be product-level commission caps.

In general insurance, the proposed first-year commission on individual health policies is 15%, compared with the prevailing commission of around 30% for distribution entities and 20% for agents.

Renewal and portability commissions are proposed to be capped at 5% and 10%, respectively. PB Fintech termed the IRDAI proposals “quite extreme”.

The company’s management said a distributor with a large customer base could have an advantage if it eventually entered insurance manufacturing, as it would already have access to a sizeable distribution network. However, PB Fintech said the economics would need to work for both the company and its partners.

What is insurance manufacturing?

Insurance manufacturing essentially means being the insurance company that creates and underwrites the insurance product, rather than just distributing or selling policies created by another insurer.