Insurance Cos seeks Govt intervention in ULIP row

  Life insurance companies today said the government's intervention to end the turf war between SEBI and IRDA will clear confusion among investors over ULIPs and help in reverting to normal business.

"We welcome the initiative as it clarifies the concerns of our customers. Anxiety on the part of our customers could have caused delay in payment of renewal premiums," Bajaj Allianz Life chief operating officer V Philip said.

"There was some confusion earlier but now there is no confusion," Aegon Religare Life Insurance CEO Rajiv Jamkhedkar said.


As regards the impact of the tussle between SEBI and IRDA over sale of ULIP schemes, he said, the company has been witnessing normal business. "The sale is normal, there is no change," Jamkhedkar added.

Another life insurance company, which did not wish to be identified, said customers sought information but it would be too early to comment on the impact of ULIP sales.

The official further said that intervention at the highest level will clear confusion about ULIPs and restore confidence of customers.

When contacted, an ICICI Prudential Customer Care executive said, "The traffic is normal and customers are not exiting or selling their schemes. In fact, new policies are also being bought."

Finance Minister Pranab Mukherjee yesterday asked IRDA and Securities and Exchange Board of India (SEBI) to "jointly seek a binding legal mandate from an appropriate court" on the unit linked insurance products (ULIPs).

Finance Secretary Ashok Chawla had hinted that the appropriate court could be a High Court, though it is not yet clear whether it would be Mumbai or Hyderabad, where the headquarters of SEBI and IRDA respectively are located.

The government had to intervene in the matter following conflicting orders passed by the SEBI and the IRDA over regulation of ULIP, an insurance product where part of the funds are invested in equity market.

On last Friday, SEBI banned 14 life insurance companies from selling ULIPs till they obtain registration from the market regulator. Within 24 hours, IRDA asked the companies to ignore the SEBI ban order and continue with business as usual.

The life insurance companies against whom SEBI passed the order were SBI Life, ICICI Prudential, Tata AIG, Aegon Religare Life, Aviva Life, Bajaj Allianz, Bharti AXA, Birla Sunlife, HDFC Standard Life, ING Vysya Life, Kotak Mahindra Old Mutual Life, Max New York Life, Metlife India and Reliance Life.

About 7.03 crore ULIP policies involving a total premium of Rs 90,645 crore were in force in 2008-09. As many as 16.7 lakh policies were sold with a premium of Rs 44,611 crore during April-February 2009-10.