Paytm, India’s $16 billion digital payments platform, has reached an agreement to buy Mumbai-based insurance firm Raheja QBE. The deal, worth $76 million, is all-cash, according to TechCrunch.

Raheja QBE

Paytm intends to “democratise general insurance services” across India

Co-founder and CEO of Paytm, Vijay Shekhar Sharma, will acquire the firm through his majority owned firm QorQl Pvt – of which Paytm owns the remainder.

The acquisition follows SoftBank’s move to buy a bigger stake (15%) in Indian insurance firm PolicyBazaar – its CEO called the SoftBank-backed expansion “a mistake”.

Paytm’s deal

Raheja QBE’s insurance products cover an individual’s health, home and vehicles, and protection for commercial properties and workplace injuries.

Prism Johnson (51%) and QBE Australia (49%) own Raheja QBE.  QorQl will acquire a 100% stake in the insurance firm.

Paytm intends to “democratise general insurance services” across India with the acquisition.

Raheja QBE has around 41,000 customers and sold 69,000 new policies in the financial year that ended in March 2020.

Paytm’s president, Amit Nayyar, says Raheja QBE’s “strong management team will help us accelerate our journey of taking insurance to the large population of India”.

He adds that the fintech wants to create “a tech-driven, multi-channel general insurance company with innovative and affordable insurance products”.

India’s insurance market

According to India’s National Health Profile (NHP), only 37% of the country’s 1.3 billion population were covered by any form of health coverage between 2017 and 2018.

That means 819 million people do not have any health insurance. This makes India a huge market opportunity for new and emerging insurance players.

In the financial year (FY) 2020, life insurance companies collected a gross premium of $94.7 billion. This is according to India Brand Equity Foundation (IBEF).

Banks are seeing the opportunities in this market too. In April 2020, Axis Bank – the third largest private sector bank in India – acquired an additional 29% stake in Max Life Insurance.

Paytm’s acquisition of Raheja QBE is still subject to customary conditions. This includes approval from the Insurance Regulatory and Development Authority of India (IRDAI).

Read next: PolicyBazaar’s CEO calls SoftBank-backed expansion a “mistake”