The ULIP drama seems set to continue for a while.
Despite the April 13 order of the Securities and Exchanges Board of India (Sebi), insurance companies are going ahead with their plans on new unit-linked insurance plans (ULIPs). And the Insurance Regulatory and Development Authority (IRDA) will continue with the product approval process.
“We have not stalled work on new products and they are at their development stage,” a senior official at a life insurance company told HT. “IRDA has said that the status quo continues for us and they will go ahead with product approvals.”
New products are an integral component of the activities of insurance companies. Sebi had on Wednesday passed an order restrainign insurance companies from coming out with new ULIPs without getting registered with Sebi.
“On an average life insurance companies launch 3-4 new ULIPs every year and this will impact our fund-raising and continuous activity in the market,” said a senior official at an insurance company, on the condition of anonymity. “However, as directed by our regulator
who will continue to go ahead with the approval of products we are going ahead with our plans,” he said.
While IRDA has not officially responded to the SEBI order, an insurance company official said their regulator has told them to go ahead with their ULIP plans.
No products are being launched as of now and it is yet to be seen what action Sebi proposes to take as and when an insurance company does launch a new ULIP product.
It all began with the Sebi passing an order on April 9, restraining 14 life insurers from accepting money from investors for ULIPs. While the next day IRDA directed the insurers to go ahead with selling the products, the finance minister on April 12 said status quo should be maintained and the two regulators should take a legal mandate on the issue.
However, Sebi came with its new order restraining launch of new ULIPs on April 13.