“A cap is simply a number on a sheet”
In today’s episode, Shrehith Karkera, co-founder of Ditto Insurance, is joined by Ishaan Wadhwa, Founder of KubrickCube, to figure out how we can fix and change how insurance is sold in India.
But why today?
Well, because of what the Irdai, the insurance regulator, did last week. They put out a consultation paper, arguing that selling insurance in India is far too expensive. So one of their proposed solutions is to institute a couple of dozen commission caps, essentially fundamentally rewiring the economics of how insurance will be sold and distributed in India.
The regulator has good reasons to be concerned. Over the last two years, insurance premiums in India have gone up by 28%. However, what insurers paid their distributors who sold those policies grew 125%. In motor insurance, it was worse: premiums went up 34%, and commissions up 259%.
This isn’t the first time the regulator has tried to solve this problem. Three years ago, it got rid of caps and decided to control the spend at the insurer side. And now, it has decided to go back to caps.
Like most Two by Two episodes, we discover that proposed solutions, no matter how well-intentioned, have consequences and second-order effects. So in today’s episode, Praveen, Shrehith and Ishaan try to collectively figure out how they can fix insurance selling in India.
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