Ulip: Various regulators may not be strong, says Irda chief

Insurance Regulatory & Development Authority (Irda) Chairman J Hari Narayan on Friday approved the difference of opinion with the capital market regulator on variable unit-linked insurance plans (Ulips) and called for intelligibility on aspects that can result in regulatory overlap.
“There is difference of opinion between our understanding of what Sebi (Securities and Exchange Board of India) forward is and what Sebi believes its own remit is,” Hari Narayan said in his first public comments on the argument. Sebi Chairman CB Bhave did not comment.
Asked to comment on the issue at the Business Standard Insurance Round Table here, Hari Narayan said having various regulators for the same issue might not be healthy for the system. He said all the regulators were working to make sure customer satisfaction, investor protection and financial strength. The issue of regulating Ulips became controversial in January after Sebi issued notices to life insurance companies saying the structure of these products was similar to mutual funds and that these were in the nature of collective investment schemes, which come under its purview.
Irda, which also received a letter from Sebi, shot back saying the regulatory architecture was clearly defined and it was authorised to regulate ULIP under the law. Subsequently, Irda and Sebi officials have held two rounds of discussions but are yet to reach an agreement.
Hari Narayan said. “In Indian regulatory architecture, what different regulators will do is well defined by law. In India, we have enacted for ourselves a system where each one of these is separate. The scope of regulatory overlap in our view is limited because they (regulators) act very carefully within the limits,”
“We do believe that in things of this nature, a greater clarity will be helpful and prevent multiple regulators on a given field. I think having multiple regulators won’t be healthy for either the customer or the industry,” said the insurance regulator.
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ICICI Pru unveils latest Ulip product

ICICI Prudential Life Insurance has launched ICICI Pru Ace, which is one of the cheapest unit-linked insurance policies available in the market. The product does not have a premium allocation charge, which gets deducted from the premium in case of other Ulips.

A zero premium allocation charge means that ICICI Pru Life Ace will invest a larger portion of premium in the market. The new Ulip charges a policy administration charge of Rs. 60 per month, apart from the humanity charges. It has a fund management charge ranging between 0.75 percent and 1.35 percent of the fund value. The Ulip offers two investment options: Fixed allocation and trigger portfolio strategy, in which a 15(%) percent downhill or uphill movement will trigger the portfolio allocation.


To promote investors to stick through the term, the ULIP also offers fidelity additions after the 10th year, which will be disbursed every five years. The loyalty additions would be equal to 2.5(%) percent of the fund value. Another beautiful feature is that the insurer will contribute two percent of the premium to your installment after the sixth year. Investors need to pay a minimum regular premium of Rs. 18,000 and the term is 10-30 years.

Ulips row: Life insurers respond to Sebi notice

Some of the major life insurance companies have replied to the market regulator Sebi's show-cause notice issued to them on the Ulips issue while others are in the method of submitting their replies, officials from different companies have said.

Sebi had issued show-cause notices to a host of life insurers asking them to give details as to why they had not taken its permission before launching Ulips-- unit-linked insurance products, the return of which are linked to stock market situation as part of the premium is invested in stock markets.
Officials from companies such as Max New York Life, Bharti AXA Insurance and HDFC Standard Life Insurance amongst others said they have responded to the Sebi notice.
Bajaj Allianz Life Insurance is also understood to have submitted its reply, a source said, adding other insurance companies are likely to submit their replies very soon.
While none would disclose details, the life insurers are understood to have taken a stand that Ulips come under the purview of Irda, the industry regulator, and hence, they do not need Sebi permission for their launch.
Sebi, in its notice, had argued that the configuration of Ulips is similar to that of mutual funds and in the nature of collective investment schemes and hence, falls under its purview.
Ulips are those insurance products where a part of the premium goes towards providing life-cover and the funds are mainly invested in stocks.