Buoyed by the government's decision to vest the powers of regulation of ULIPs with insurance regulator IRDA, industry players today said the move will end two months of uncertainty and boost investors' appetite for these schemes.
They also welcomed the government's decision to set up a committee headed by Finance Minister Pranab Mukherjee to decide on the jurisdiction of regulators over hybrid instruments.
"The speed with which the government has acted to end uncertainty about the regulation of Unit-Linked Insurance Products (ULIPs) is commendable. It will help boost market sentiment," IDBI Fortis Life Insurance CEO and MD G V Nageswara Rao said in a statement.
The uncertainty is over for both insurance companies and policy holders, he added.
The government has ended the turf war between insurance regulator IRDA and capital market watchdog SEBI, saying ULIPs will be regulated by IRDA.
On Friday night, President Pratibha Patil issued the ordinance, explaining that the life insurance business shall include any Unit-Linked Policy or scrips or any such instruments.
"This would set at rest all the issues regarding ULIPs between two financial regulators, i.e. Securities and Exchange Board of India (SEBI) and Insurance Regulatory and Development Authority (IRDA)," the Finance Ministry had said in a statement.
The government has also constituted a high-level committee chaired by Finance Minister Pranab Mukherjee, which will sort out all issues of jurisdiction regarding hybrid products.
The committee on hybrid products will include the Finance Secretary, the Financial Services Secretary and heads of RBI, IRDA, SEBI and the Pension Fund Regulatory and Development Authority (PFRDA).
Welcoming the move by the government, Bajaj Allianz Life Insurance MD and CEO Kamesh Goyal said, "We are happy that all confusions regarding ULIPs have been comprehensively removed. The setting up of a committee is a good step and an effective mechanism to resolve issues regarding jurisdiction of any financial instruments in the future."