Paytm insurance licence in the offing

Online payments major Paytm plans to apply for a licence to operate as a life and general insurer.

Paytm, which has set up two separate entities named Paytm Life Insurance and Paytm General Insurance, will file an application with IRDAI, stated a report in The Economic Times. Paytm’s move to aggressively chase the overall consumer finance sector is aimed at accelerating growth in its non-payments business.

E-commerce major Amazon and Flipkart are also in the race to enter the insurance market. Amazon was in talks to invest in an online insurance start-up Acko. The deal, if it goes through, will see Amazon co-create financial products with Acko, besides being its distributor.

Backed by Japan’s SoftBank, Paytm will have to go through multiple levels of regulatory checks which may take another year before it starts offering its own insurance schemes. Currently, Paytm runs as a corporate agent for group insurance on its platforms in partnerships with insurers. If granted a licence, Paytm will be able to underwrite risk on its own.

While the regulatory framework requires a minimum of INR100 crore to start an insurance company, Paytm is expected to double down on its capital requirements for the insurance business as it is places an aggressive bet on this business. This is part of the broader strategy of looking to be a one-stop shop for financial services needs of consumers. The online payments firm recently launched a wealth management business as well.