Shares of Policybazaar parent PB Fintech and insurtech company Turtlemint crashed after the Insurance Regulatory and Development Authority of India (IRDAI) proposed a sweeping overhaul of insurance distribution, including hard commission caps and lower expenses of management (EoM) limits.

PB Fintech shares plunged 26% to ₹1,398.60 on the BSE, hitting the dynamically revised lower price band. The stock opened 10.1% lower at ₹1,700 and continued to slide during intraday trading.

At ₹1,398.60, PB Fintech’s market capitalisation stood at ₹64,720.6 Cr (about $6.7 Bn). 

Meanwhile, Turtlemint shares hit their 20% lower circuit of ₹109.10, which was also the stock’s all-time low. The company’s market cap fell to ₹3,212.8 Cr (about $333 Mn).

The sell-off followed the release of IRDAI’s consultation paper yesterday, which proposed recalibrating the economics of insurance distribution by lowering commissions and insurer expenses, increasing transparency, and tightening accountability for distributors.

Among the most significant changes, IRDAI has proposed nil commission for insurance distribution entities on third-party insurance for new vehicles and a 5% cap on new-vehicle own-damage, personal accident, and legal liability covers. 

For individual health insurance, the regulator has proposed capping commissions for distribution entities at 15% of the premium on first-time sales and 5% on renewals and portability.

The proposed caps are significant as IRDAI’s paper said average motor insurance commissions currently stand at 24%, with rates ranging from 13% to 50%.

5% within five years. For general insurers, the regulator has proposed lowering the limit to 25% within two years and 20% within five years.

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