Sebi says new Ulips will require its approval
The stock market regulator Securities & Exchange (Sebi) has clarified that 14 private insurance companies will be required to take Sebi’s prior approval for launch of new unit linked insurance plans (Ulips). It has said that insurers can continue selling existing Ulip schemes which were in force as on 9 April 2010. Ulips are products similar to mutual funds with an added life cover. A large chunk of funds raised through Ulips are invested in equities.
It may be recalled that the finance ministry had to intervene, early this week, to resolve a tussle between Sebi and insurance regulator Insurance Regulatory and Development Authority of India (Irda) on oversight of Ulips after Sebi late last week barred 14 insurance firms from selling Ulips without its approval. Soon after the Sebi order Irda directed the 14 insurers to ignore the Sebi order saying that the implementation of the Sebi directive will bring the insurance industry to a standstill which would not be in public interest and would be detrimental to the interests of the policyholders and prejudicial to the interests of the insurers.
Following intervention from the government the two regulators had, early this week, decided to maintain a status quo on unit linked insurance plans or Ulips, keeping in abeyance the orders issued by both recently. The government had also reportedly asked the two regulators to seek a legal mandate from a court on oversight of Ulips.
According to IRDA, a total of 16.7 lakh Ulip policies, with a premium of Rs 44611 crore, were sold from 1 April 2009 to 28 February 2010. A total of 7.03 crore Ulip polices involving a total premium of Rs 90645 crore were in force in 2008-09.
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