PhonePe, a fintech company, said on Monday, August 30, that it has been granted an Insurance Broking license by the Insurance Regulatory and Development Authority of India (IRDAI). PhonePe joined the Insurtech market last year with a limited insurance ‘corporate agent’ license that allowed the business to collaborate with only three insurance providers per category. PhonePe can now market insurance products from all insurance firms in India thanks to its new ‘Direct Broking’ authorization.
IRDAI grants PhonePe an Insurance Broker License on August 30, 2021. PhonePe joined the insurance industry last year with an insurance corporate agent license, allowing the firm to work with only three types of insurance companies: health insurance, general insurance, and life insurance. With this License, the firm would be able to distribute insurance products from any insurance provider in India.
IRDAI has granted PhonePe an Insurance Broker License, allowing them to begin making customised product recommendations to its more than 300 million Indian users and provide a far more diverse range of insurance products to Indian consumers.
What is Insurance Broker License
Before we get into the recent news about IRDAI issuing this License to PhonePe, it’s important to understand about this particular license and its significance. An Insurance dealer is a firm or someone that safeguards policies for clients; Insurance dealers would protect commissions from insurance companies on various types of policies they provide consumers. A firm that wishes to become an Insurance dealer must apply for a license with the IRDAI.
In India, insurance dealers are subject to strict regulations. The IRDAI intends to enact such regulations. These regulations would include the IRDA Act of 1999 and the IRDAI (Insurance Brokers) Regulations of 2018. As a result, after the candidate has an Insurance Broker License, they must follow the requirements of the aforementioned regulations and laws. A broker would operate as a go-between for the general public and insurance firms.
In India, there are three categories of insurance dealers:
- Direct Brokers
- Reinsurance Broker
- Composite Broker
What are some prominent benefits of IRDAI Insurance Broker License
Provide you with legal status.
A firm with an insurance dealer license is considered an approved entity that follows the law and is devoted to openness in its code of conduct. The legal position might assist the broker in reaping the benefits in the long run.
Increase Brokers’ Earnings
According to the rules, insurance dealers represent prospective clients and are authorised to sell products from a variety of insurers. The insurance dealer license enables the broker to enter into several sales contracts with other firms, allowing them to expand their client base and income stream.
With a diverse portfolio of insurance products at their disposal, businesses can engage with a diverse set of clients and so optimise profits through higher sales. The insurance dealers, unlike the insurance agent, have the freedom to reach a large market. This is most likely one of the most valuable advantages of having this insurance license.
Access to a Variety of Insurers
License holder brokers are required to market services and goods for a variety of clientele. It implies that, depending on their skills, they can contact a number of insurers and persuade them to draught a sale contract. In terms of client engagement and sales portfolio, an insurance dealer is far more adaptable than an insurance representative.
Individualized Sales Strategy
Another significant advantage of having a license is that the insurance dealer or broker can use a tailored sales approach to market the insurer’s product as long as it does not jeopardise the integrity of the bylaws. Such relaxation can assist the broker in creating unique sales plans for the various goods in order to increase sales and income. However, the broker may not promote anything insulting or misleading in nature, otherwise, it would be considered a violation of the bylaws and contract.
There are several online lenders that offer a diverse range of insurance products to end consumers. This demonstrates how the licensee can use any approach, including an internet channel, to market the insurance product. However, licensed brokers are permitted to undertake any sale effort that avoids the statutory obligation under the legislation.
Insurance Broker’s Diligence with the Highest Faith and Integrity
Despite these obvious benefits, the broker must exercise caution and vigilance. They must interact with customers with the highest trust and honesty, as well as protect the confidentiality of the documents they provide. The licensed broker is responsible for a variety of tasks, such as counselling a client or assisting clients with time-consuming paperwork.
Their duty is to provide prospective customers with the best service possible without making any compromises. They have the responsibility for the client’s reputation. A single erroneous judgement or act of carelessness might lead to the termination of the selling contract. Broking is a delicate profession that requires the brokers’ untainted conscience.
What is PhonePe?
PhonePe is a mobile payment platform that allows you to transfer money via UPI, pay utility bills, recharge phones, and do a variety of other things. It operates on the UPI (Unified Payment Interface) system, and all you have to do is enter your bank account information and create a UPI ID. There is no need to recharge the wallet because the funds will be withdrawn straight from your bank account with a single click in a secure and safe manner.
PhonePe’s mobile application is safe and secure, and it will assist you in meeting all of your financial needs under one roof in an appropriate manner. You do not need to go through the time-consuming procedure of establishing a beneficiary; all you need is a VPA, or Virtual Payment Address, through which money may be given at any time and from any location.
PhonePe Private Limited is India’s leading e-commerce payment platform. In 2015, the e-wallet firm was founded. This e-commerce payment platform provides a variety of services in more than 11 languages. As a user, you may use the app to pay bills, buy tickets, book cabs, and so on. You may conduct transactions in the app using a variety of ways, including UPI Credit Card, UPI Debit Card, connected Bank Account, and PhonePe Wallet.
Insurance Broker License for PhonePe Issued
PhonePe entered the insurance market as a corporate agent last January 2020 and has since been selling various insurances. According to PhonePe, the company’s early insurance product releases had a positive reaction from millions of consumers, prompting it to seek a License in order to swiftly expand its insurance offering for customers.
As we already know, PhonePe is the fastest growing insurtech in India, and their move to broking will accelerate their growth in the insurance industry. They are constructing a solid, full-service platform for their highly engaged client base through new solutions developed in collaboration with high-quality insurers. Mr. Gunjan Ghai, Vice President and Head of Insurance at PhonePe, stated, “This move will get us closer to our goal of being a one-stop destination for all of our client’s insurance needs.”
In addition, One97 Communications Ltd. was granted a License by the IRDAI (Insurance Regulatory & Development Authority of India) last year, permitting it to provide various insurance services such as health, life, and vehicle.
PhonePe’s business model includes a variety of financial services.
Mr. Ghai claims that the firm is creating a full-service platform for its clientele by partnering with high-quality insurers to provide unique solutions. The network has about 20 million subscribers, with non-metropolitan areas accounting for 80 per cent of them.
According to estimates, the company’s objective is to reach 900 million people in the next 8 to 10 years. In 2021, PhonePe joined the financial industry with the launch of gold, providing clients with a secure and convenient option to purchase 24-K gold on their website. It has also created a variety of mutual funds and insurance products, including liquid funds, overseas trip insurance, tax-saving funds, and Corona Care, a Covid-19-specific insurance programme.
It also introduced its Switch platform in 2018, allowing consumers to order from over 600 apps, including Swiggy, Myntra, RedBus, IRCTS, OLA, and many more, straight from the PhonePe mobile app. PhonePe has embraced 8-10 languages during the previous five years. Currently, the firm will celebrate its fifth anniversary on August 28, 2021.
Initially, PhonePe had a restricted insurance corporate agent license that enabled them to work with only three insurance providers. However, after receiving a License from IRDAI, PhonePe will be allowed to provide more insurance products to its consumers across India. It will be interesting to watch how PhonePay took this advantage and how they touched another milestone with this opportunity in India.