The government has said that Unit Linked Insurance Products (ULIPs) will be regulated by the Insurance Regulatory Development Authority (IRDA) and not by the Securities Exchange Board of India (SEBI), bringing to an end a two-month regulators’ turf war.
“Life insurance business shall include any ULIP or any such instruments. This would set at rest all the issues regarding ULIPs between the two financial regulators — SEBI and IRDA,” a finance ministry statement said. The government has promulgated an ordinance on Friday evening amending the RBI Act 1934, Insurance Act 1938, SEBI Act 1992 and Securities Contract Regulations Act 1956, the statement said.
A high-level committee chaired by Finance Minister Pranab Mukherjee will sort out all issues of jurisdiction regarding hybrid products.
In April, SEBI had banned 14 life insurance firms from issuing fresh ULIP schemes. IRDA retorted by asking the life insurers to ignore the SEBI order. The finance ministry had asked both the regulators to move the Court and maintain status quo in the meantime.