There is a shift from Ulips to traditional products

SBI Life, the life insurance subsidiary of State Bank of India, has expanded its operations despite Insurance Regulatory and Development Authority's sweeping changes in the norms of unit-linked insurance plans from September last year.

MN Rao, managing director and chief executive officer of SBI Life speaks to FE about his strategies to cope up with regulatory challenges. Excerpts:

How SBI Life is faring in the days when the life insurance industry's numbers are falling?

Business so far has remained satisfactory at SBI Life though falling in line with industry. We have done R2,050 crore of business in the new business premium until August 31 in this financial year, as against R2,390 crore in the corresponding period of the last financial year, thus witnessing a fall by 14% during the period. Now the product mix has changed. We have shifted to low-ticket size product. Still, the total product portfolio remains unchanged from July last year to July this year. Till July during this financial year, our premium has gone up by 3% year-on-year. However, from August 2010 to August 2011, our performance is down by 14%. It has happened as August 2010 (the sales were very good during that particular month) was the last month for all of our old products and we had launched new products in September 2010 in line with the new regulations of regulator Irda. In total business premium, we are growing over last financial year on yield-to-date (YTD) basis in August 2011 when we achieved a sum of R3,983 crore, as compared to R3,706 crore in the corresponding period of the last financial year, thus recording a growth of 7.5%. Going forward, we do expect to show a growth on new business front and total business premium which are expected to go up by 10% and 15-16% respectively by the fiscal-end, as compared to our performance during the last financial year.

While the current volatile capital markets which may nots be conducive for Ulips, how are you trying to push traditional products?

As of now, our product mix-Ulip and traditional and corporate solutions plan (or group plans) is in the ratio 55:45. Total numbers of Ulips have fallen by 10% during August this financial year, when compared to the level of August 2010. Again, our traditional products have gone up by 125% during the period. Our group fund alone has increased by 15% during the same period.

Do you think the highest NAV products launched by insurance companies are misleading and Irda should take some action?

We do have highest NAV product, named as Smart Performer and it is doing well. The regulator is worried about administrative issue related to the product and how to make the disclosures to the customers about such products so that they get a fair deal. Life Insurance Council is working on it.

Has your investment portfolio fallen? Do you think that investment income will fall this year?

Nearly 55% corpus of our total assets under management (AUM) has been invested in equities. In majority of funds, our fund performance has been well so far. In most of the funds, we are in the top performer. In case the same market condition continues, we would invest R6,000-7,000 crore additionally in equities during the remaining part of this financial year. The balance amount would be invested in either G-sec or corporate bonds. There is a shift from Ulips to traditional products happening now. I think, it will stabilise after a year from now.

Do you have any capital infusion plans?

We had our last capital infusion to the tune of R500 crore in SBI Life in 2007-08. It was jointly done by the promoters like SBI and BNP. After that, there has been no requirement of capital infusion because of profitability. We first broke even in 2005-06. Except for a marginal loss, which was incurred by us in 2008-09 thanks to the market crash, we have continued to make profits constantly since then.

With SBI as the parent body, it was expected that SBI Life would emerge as a leader in the life insurance industry soon?

We started our operation some 10 years ago. We are the life insurer with the lowest operating ratio. Also, we are the largest player in the private sector in terms of total business premium as on July-end. The strength of SBI Life is primarily due to the support provided by the SBI. Most of the SBI branches are selling our products through bancassurance channel. On the selling of products of more than one insurers (which is permitted now) by the banks, a report has been submitted before Irda. We are in favour of selling two products each from life insurance and non-life insurance companies. We believe that sale of insurance product is a long term relationship with any bank. There should be close coordination between bank and insurance companies, not only for the sale of their products, but also for servicing of product and grievance redressal so that customers of the bank should have a choice.

ULIPs to get costlier with boost in service tax

The projected increase in the service tax on life insurance products will make both traditional and unit-linked insurance plans, or Ulips, more expensive. The industry expects the costs to go up by 50-75 basis points (one bps = 0.01%).

Although companies are yet to figure out the crash of the proposed increase, most insurance executives said premiums may go up by as much as 75 basis points.

"Policies are going to get costlier with the increase in service tax. While traditional plans will cost nearly 50 basis points more, Ulips may see a 75 basis points increase," said SB Mathur, secretary general, Life Insurance Council.

The budget for FY12 has proposed a 50(%) per cent increase in service tax for traditional plans - where investments from the premium collected are made as per the regulatory rule. Currently, policyholders of traditional endowment or money back plans need to pay 1(%) per cent of the total premium as service charge.

In Ulips, where the policyholder chooses the investment mix (how much to put in equity or debt), the service tax will be charged on the portion of the premium not allocated for investment, like premium allocation and policy administration charges. At present, the service tax is only on humanity and fund management charges.

"This taxing of the allocation charges and policy administration charges will affect the yield, and we imagine at least 20-25 bps reduction in yield for the policyholder," said G Srinivasan, CFO, Bharti Axa Life Insurance.

A senior executive of a life insurance company said efforts made by the Insurance Regulatory and Development Authority, or Irda, to increase the returns for policyholders by capping the charge will get neutralized to an extent.

Insurers, however, are not clear whether the service tax will be part of the 3(%) per cent cap on the total charges.

Last year, Irda had put a cap on various charges, including surrender and fund management charges. The difference between the gross and the net yield is capped at 3(%) per cent for policies with less than 10 years of maturity; for policies with a maturity of more than 10 years, the difference is capped at 2.25(%) per cent.

P Nandagopal, managing director of IndiaFirst Life Insurance, said there is no clarity on whether the service tax will come under the charges prescribed for Ulips. "In case it is outside the 3(%) per cent cap, the premium will go up for policyholders. If it is within the prescribed cap, insurers will have to control expenses well."

"The increase in service tax will increase the cost of insurance for policyholders," said GV Nageswara Rao, managing director and CEO of IDBI Federal Life Insurance Company.

Ulips to be a third of our products

With a focus on long-term savings plan and protection, Max New York Life Insurance has planned its traditional and Ulip products to suit the changing market dynamics. In an interview with FE’s Debojyoti Ghosh, the company's chief executive and managing director, Rajesh Sud, says the insurance company is looking at a healthy 33:67 mix of Ulip versus traditional over the next few years.
In the current market what kind of business do you foresee?
The year 2011 will be a year of change and adaptation for the life insurance industry. Life insurance industry will need to focus on and be sold as long term contractual savings and protection tool. It will also need to focus on providing consumers with a much more balanced product portfolio. The true value of a professional dedicated agent advisor will become truly visible since the product changes and disclosure requirements will ensure a higher seller and customer engagement at the time of the sale. Some select customer segments may also use the internet for simple products such as term plans.
Distribution trends may also under go changes. Much of the growth in life insurance is expected from increased agents' productivity.
Are you looking at a change in product mix and cost rationalisation?
A sustainable profitable growth is only possible through customer centricity. We will drive profitability in the business by reducing acquisition expenses and increasing persistency. We will enhance our focus on renewal income which obviously comes at a lower cost. For the period January to August, our product mix has been 30:70 (traditional: lips) and 85:15 for September to December. This significant skew toward traditional products has been mainly due to the limited Ulip offerings. We currently do not have pension and growth Ulips in our range which contributed 40(%) per cent in the first 8 months of 2010. We are looking at a healthy 33:67 mix of Ulip versus traditional over the next few years.
Is there any change in your investment scheme?
There has been no change in our investment philosophy. We follow a prudent investment philosophy to minimise risk.
The investments made by the company are in safe instruments – top 5 debt investments are AAA rated and majority of equity investment are in large cap, which are safe and provide good returns in the long run....

ULIPs have prospective for life insurers despite curbs'

Unit linked insurance policies (ULIPs) designed and sold under the new norms that came into effect Sep 1 have a great prospective for life insurers, said experts participating in a board discussion here Monday on "Future of ULIP".

The panellists, however, were not common on which segment of the market ULIPs were suitable for.

The board discussion was part of the 2-day seminar on "Current Issues in Life Assurance" organized by the Institute of Actuaries of India (IAI).

The Insurance Regulatory and Development Authority (IRDA) brought out new norms governing ULIPs capping different charges levied by the insurers.

The new norms kicked in Sep 1 and in the process sucked out around 250 policies from the market.

The life insurance industry had to be content with selling around 75 new ULIPs approved by the IRDA since then. This has brought down new business for life insurers.

Richard Holloway , managing director (South East Asia & India) Milliman Private Limited, said: " ULIP is a popular product throughout the world that has stood the test of time meeting the needs of customers, giving them higher returns and offering transparency."

He said life insurers complain that the new ULIP norms leave them with limited scope to reimburse the distributors as commissions have to be reduced.

In addition, the companies will not be able to enjoy high surrender profits - profits earned when a policy holder surrenders his policy - owing to lower surrender penalties stipulated in the new norms.

"The industry said the focus should be on mis-selling in general and not capping of charges," Holloway said.

Stating that ULIP has good potential, T.R. Ramachandran, chief executive officer & managing director of Aviva Life Insurance Company India Limited, said: "The product is not for middle or lower middle class segment. There cannot be a ULIP where the annual premium is around Rs.8, 000."

Such policyholders are buying the product just for claiming income tax exemption, he remarked.

Sanjiv Bajaj, managing director, Bajaj Capital Limited, said ULIPs had to be targeted at individuals as these offered them to accumulate wealth.

LIC crosses Rs 1,000 crore score under new ULIP Plans

Country's largest insurer, Life Insurance Corporation (LIC), today said it has crossed the Rs 1,000 crore-mark from its two new unit-linked plans, which were launched after the latest guidelines of the sectoral regulator IRDA took effect last month.

"Life Insurance Corporation of India has crossed the Rs 1,000 crore marks under the new ULIP plans, Pension Plus and Endowment Plus. The total premium income under these two plans as at October 18, 2010 was an awesome Rs 1,282 crore approximately," LIC said in a statement.

The new plans were introduced last month. Pension Plus was launched on September 2 and about Rs 150 crore of premiums have been collected under it from more than 30,000 policies.

Endowment Plus plan was launched on September 20 and it was LIC's 16th linked product. Over Rs 1,000 crore has been garnered from Endowment Plus alone from over 2 lakh policies, in merely 29 days.

As per new guidelines, effective September 1, Insurance Regulatory and Development Authority (IRDA), the commission paid to distributors and expenses charged by insurers will no longer be front-loaded. Instead, they will be distributed over the lock-in period of the schemes, which has been raised to five years from three years earlier.

Currently, ULIP products account for over 50 per cent of the total premium collected by the life insurance companies.

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New ULIP norms – What it means?

Nearly three-quarters of the 1.6 million private life insurers have had trouble in business. Insurers are taking steps to cut costs in the wake of a dramatic reduction in charges of unit-linked insurance policies (or Ulips) by the insurance regulator, IRDA. The new norms, may push 1.2 million agents out of work, took effect from 1 September.
Ulips are: A hybrid product that combines insurance and equity investment.
They account for at least 80% of new business premiums for life insurers. The size of the agency channel, which sells policies of 23 life insurers, has grown from 900,000 to about three million since 2000. Until recently, agents were aggressively pushing sales of Ulips, earning commissions of up to 40%!
The state-run, Life Insurance Corp. of India (or LIC), alone manages at least 1.3 million agents. There are about 310 million policies in force, including traditional life insurance policies.
The insurance regulator has capped various charges including surrender charges. Till 31st August, companies were able to levy up to 100% as surrender charges from a customer if a policy was discontinued.
The regulator has also ordered insurers to offer a minimum guaranteed return of 4.5% on the fund value in linked pension plans. Earlier, there was no such norm and the value of the funds invested entirely depended on the yield of the instruments where the premium was allocated.
The new norms will benefit policyholders but will bring down average agent commissions in Ulips from 15-17% to 7-9%. The reduction in the first-year agent commissions will help curb rampant mis-selling, insurance firms will be required to underwrite more losses, infuse more capital and cut costs to sustain Ulip sales.
LIC may not need to resort to cost-cutting measures due to its highly profitable business, but private sector insurers are planning drastic cost-cutting measures to sustain their businesses in the new regime.
What measures companies can take?
• Cutting the agency channel is one of several cost-cutting measures.
• The firms plan to cross-sell products through branches of associate companies instead of opening new branches,
• Cut commission of agents retained
• Redesign new products with variable premium.
• The companies are also focusing on alternative distribution channels such as subancassurance, where the expenses are lower. According to industry estimates, the cost of sales through bank branches or bancassurance can be as low as 20% of the value of the policies sold.
• To save costs, private players are also focusing on training facilities to improve agents’ productivity.
• Some bank-owned life insurers are planning to sell insurance policies through the branches of their mutual fund subsidiaries.
Statistical analysis:
According to a recent study, existing distribution channels are almost entirely focused on Ulips. Nearly 85% of new business premium comes from sales of Ulips but the cost of sales through agency channels is very high—between 50% and 100%.
The study said the cost should be brought down to 25-30%. It also revealed that nearly 60% of the agents work part-time.
India’s life insurance industry has grown some eightfold in the past ten years, collecting a total premium income of Rs2.61 trillion in 2009-10, or which nearly Rs1.1 trillion came from Ulips. At least 310 million life policies are in force now.
The regulator has so far cleared 51 of 68 new Ulips filed by insurers. There were 230 Ulips in the market till August.

Investors can expect better Ulip products and services

Several new unit-linked insurance plans (Ulips) have started hitting the market after the Insurance Regulatory and Development Authority’s (IrDA) new strategy on Ulips came into effect from September 1. So what has changed?

Existing Ulip customers have nothing to worry as the regulations will only apply prospectively and will not affect them in any way.

Cap on charges between gross and net yields throughout the policy term that will be mostly evenly spread, and increase of lock-in period from 3 to 5 years will enable the customer to reap higher returns.

The new guidelines restrict the penalty that an insurer can levy on premature surrender. This cap on surrender penalty will ensure greater liquidity for the customer and reduce his loss even if he surrenders early.

Enhanced customer disclosures will improve transparency and drastically decrease mis-selling. Companies on their own accord can also be projected to add check layers beyond those mandated by the regulator to weed out mis-sales.

Insurance companies will invest more in better equipping intermediaries both in terms of knowledge and advisory capability.

Further, mandatory Need Based Selling, whereby insurance agents will be required to assess the customer’s exact insurance needs based on his financial and filial profile may also soon become an integral part of the sale process.

Customers can look forward to far better product and service experience. Greater customer affinity is likely towards life insurance in general and Ulips in particular and more customers can be expected to ride out the entire policy term.

As for companies, most of the old Ulips will be off-the-shelf and they will introduce a swing of products to adhere to the new guidelines. However, margins may come under pressure. Emphasis will now be on higher business volumes, increasing average ticket size and bettering persistency levels. Insurers will qualitatively enhance the customer value proposition by introducing simpler, more transparent products, better service and support during the policy term and, improving the overall quality of engagement.

Current levels of lapsation and surrender may consequently reduce. Insurers may also look at innovative platforms to rationalise cost and enhance appeal. The product mix will also change. From the current Ulip-heavy portfolio, insurers will strive to achieve greater balance between traditional plans and Ulips. However, insurance firms which had planned to list may revisit their plans, since valuations may get affected now.

New Ulip norms starting 1st Sept, policyholders to advantage

Starting Wednesday, policyholders will get a much fairer deal if they invest in unit-linked insurance plans (Ulips).

The new rules of the Insurance Regulatory and Development Authority (Irda) take result from September 1. Ulips, which contributed 80(%) per cent of the total premium collected by private companies, will see an impressive change. Irda has capped the difference between net and gross yields during the policy term. Insurers will have to offer a minimum approved return even if a policyholder withdraws from the fund before maturity. For the 5^th year, the cap is fixed at 4(%) per cent.

WHAT’S IN STORE?
Move: The difference between net and gross yields capped during the policy term.	Effect: The policyholders will get higher returns on their Ulip investments.
Move: The lock-in period will increase from three years to five years.	Effect: If anyone withdraws in the first year, he will get back the amount after deduction of charges only after the 5th year.
Move: Surrender charges have been capped at a level much lower than what exists at present	Effect: It will ensure that only acquisition expenses are recovered in the event of the discontinuance of the policy.

From tomorrow, the lock-in period will increase from 3 years to 5 years. If a policyholder wants to remove in the 1^st year, he will get back the amount invested after deduction of various charges only after the 5^th year.

To ensure only gaining expenses are recovered in the event of the discontinuance of the policy, surrender charges have been capped at a level much lower than what exists at present. The industry had been benefiting from higher lapses. Funds collected from policyholders under lapsed policies are sent to a part fund and the money is given the the policholder after the company deducts all charges. The charges are as high as 100(%) per cent in some companies.

“We have always maintained that insurance is a long-term contract. Any pre-termination of policy is not good for all stakeholders,” said S B Mathur, secretary general, Life Insurance Council.

“Products are going to be more gorgeous now. We expect greater customer interest, as charges will be uniform as well as lower,” said G V Nageswara Rao, managing director and chief executive officer, IDBI Federal Life Insurance.

Rao added the customer could now expect higher returns, as the amount of funds invested was likely to go up.

Along with these changes, the regulator has set minimum disclosure guidelines for insurers.

“Now agents cannot take policyholders for a ride. They (policyholders) can now see the financial position of the company over the website and do not need to depend on agents,” added Mathur.

On the flip side, though overcharging and misspelling will come down, insurers say product innovation and customisation will be affected. Also, traditional plans will suit those in the lower ticket size segment.

ING Life banking on traditional products vis-a-vis ULIPs

Private life insurer ING Life India today said it would continue to focus on selling traditional products vis-a-vis Unit Linked Insurance Plans (Ulips).
“Traditional life insurance plans are helpful to all the stake holders, including the insured, insurer and the financial advisor,” ING Life India, executive vice-president (central and east), Syed Sarfaraz told the media here.
He informed the company already maintained a ‘healthy’ product mix with the traditional life insurance accounting for 60(%) per cent of the portfolio, while the balance coming under Ulips.
Ulips provides for life insurance, where the policy value varies according to the value of the primary assets at that time. It offers life insurance as well as an investment like mutual fund. While, the part of premium goes towards the sum assured, the balance is invested in instruments such as equity.
Recently, sector watchdog Insurance Regulatory and Development Authority (Irda) had tightened the norms for Ulips by raising lock-in-period from 3 to 5 years to provide risk safety. This has made Ulips long term financial instruments.
These guidelines followed the public spat between Irda and Securities and Exchange Board of India (Sebi) for jurisdiction over Ulips, which Sebi had claimed were equity products.
Based on traditional platform, the product guarantees the maturity value as decided by the parent, additional guarantee of death benefit to policyholder, guarantee of policy continuing in case of death of parent and guaranteed coverage for child after maturity.

Irda permission revelation in Ulip advertisements

To improve transparency in unit-linked insurance products (Ulips) and protect the interest of policyholders, the Insurance Regulatory and Development Authority (IrDA) has asked life insurers to release the underlying circumstances and elements while advertising products.
“A review of the advertisements, particularly those relating to unit-linked life insurance products, reveal the necessity to improve the content and presentation in fulfillment with the provisions of the above referred regulation and guidelines,” said IrDA.
The regulator said when an insurance advertisement is highlighting the benefit of guarantees; it obviously needs to disclose the underlying environment under which the guarantee operates, including cost of guarantee and charges.
Further, Irda said if the underlying conditions are very complex, the text, wording on guarantee must be accompanied by the phrase “Conditions Apply” in a font that is at least 50(%) per cent of the font size used to highlight the guarantee.
The advertisement will also have to clearly state the availability of underlying elements of ‘life insurance coverage’ to help identify the product as an insurance product.
It has warned against brand names of products that use terms or phrases that convey a fictional sense of security.

Birla Sun Life Insurance rides Ulips to timepiece profit

Increased focus on unit linked life insurance plans has helped Birla Sun Life Insurance Company book net profit for the first point in 10 years for the quarter ended June 2010.

This happens at a time when the unit-linked insurance products (Ulips) face many dogmatic hurdles.

For the April-June quarter, the company posted a net profit of Rs 9 crore beside net loss of Rs 111 crore in equivalent period previous financial years.

“The company is working on reinforcing the Ulip as a long term protection cum savings product,” the company said in its release.

The Bachat (Endowment) plan launched in May this year is garnering positive reply from investors, the release said.

The company has more than 85(%) per cent of the their portfolio in Ulips, while traditional plans amount to a sub-15(%) per cent.

While the new business premium saw 7(%) per cent increase, the renewal premium helped the revenue growth with a 27(%) per cent increase. The new business premium grew to Rs 473 crore and the renewal grew to Rs 669 crore for the financial year ended March 2010.

The company recorded a growth of 18(%) per cent in total premium income at Rs 1,143 crore. Assets under management (AUM) of the company scaled up by 44(%) per cent to Rs 16,841 crore.

The company’s value of new business margin (NBM) grew from 20.3(%) per cent last year to 22.5(%) per cent this financial year. The company made the public admission of its fixed value of Rs 3,816 crore as on March 2010, up 25(%) per cent year on year.

Embedded value is the future value of the present business (in-force policies) of the life insurance company.

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To be taxed Ulips investment products

The Finance Ministry has said the unit-linked insurance products (Ulips) are investment products and are therefore possible to be taxed after performance of the Direct Taxes Code (DTC). "Ulips are basically investment products and wanted to be taxed.

The final sight, however, will be taken at the time of the formulation of the code", the finance ministry sources said here today. At present, no tax is levy on the returns on Ulips, an equity-linked insurance implement, the regulation of which has become a bone of contention between the insurance regulator Irda and market watchdog Sebi.

Ulips are hybrid investment-cum-insurance products and report for over 50(%) per cent of the total insurance business in the country. When contacted, Life Insurance Council secretary General SB Mathur said, "We have maintained that Ulips are not pure investment products.

But calling them pure investment product is not right. We will approach the income department in due course.

“As per the revised DTC, which will replace the 50-year-old Income Tax Act, only six particular instruments will qualify for the EEE (exempt-exempt-exempt) taxation. Under the EEE mode, tax exemption is provided at all the levels of the instrument-- at the time of investment, at accumulation and at the time of withdrawal.

The DTC is expected to be ready from next April. The six instruments which will qualify for exemption are government provident fund, public provident fund, recognized provident fund, pension funds regulated by Pension Fund Regulatory and Development Authority (PFRDA), pure life insurance products and annuity plan.

As Ulips are investment products, the Finance Ministry official said, it could not be classify as pure life insurance product. The insurance watchdog Irda is locked in a turf war with Sebi over regulation of Ulips.

The difficulty came to the fore after Irda advised 14 life insurance companies to ignore the April 9 Sebi''s order banning Ulip schemes. The row impelled the Finance Ministry to interfere in the matter and mediate an agreement under which both the regulators agreed to seek a legally compulsory order on Ulip jurisdiction.

Following this, Sebi moved the Supreme Court to transfer all cases pertaining to the Ulip issue to the apex court following which notices were sent to the Centre, Irda and 14 insurers. The top court will hear the matter on July 8.

ULIPs may misplace flavour without spice of tax advantage

Unit-linked insurance policies (ULIPs), which constitute the bulk of the business for insurance companies, may end to be a popular investment product if the revised conversation paper on the Direct Taxes Code (DTC) is implemented in its present form.
This is because the revised conversation paper has recommended that only approved pure life insurance products and annuity schemes are subject to EEE (Exempt Exempt Exempt) technique of tax treatment.
“Approved pure life insurance products and annuity schemes will also be topic to EEE method of tax treatment”, the revised paper said.
This implies that the final pay-out from unit-linked plans could be taxed, said officials from the insurance industry.
The DTC had proposed tax deduction on the final pay-out of insurance policies, while exempting the policy premium at the time of role and the interest on it. Life insurance companies had asked that the present system of tax exemption for maturity proceeds be continued. They had made a representation to the Government that the EEE method of addition should continue as against the Exempt Exempt Tax (EET) method proposed.
It seems that while the government has decided on exempting term and whole life policies, it has decided to keep unit-inked products under the EET category.
Insurers fear that this move will spoil ULIP sales. ULIPs comprise almost 80-90(%) per cent of the private life insurers' business and around 65(%) per cent for Life Insurance Corporation of India.
“It is a relief that at least death claim benefits have now been exempted from tax. But it seems that ULIPs have been retained under the EET rule. We will have to go back to the government again with our representation”, said Mr Kamalji Sahay, Chief Executive Officer, Star Union Dai-ichi Life Insurance Company.
The Life Insurance Council is expected to make a representation to the Government for counting ULIPs under the EEE category.
Insurers are also happy that annuities, which were taxed under the existing system, have been exempt from tax.
Currently, up to one-third of the maturity amount when withdrawn is treated as tax-free. However, the remaining two-third amount was taxed as per the individual's tax slab.

ULIP row will be resolved shortly: FM

Finance minister Pranab Mukherjee on Tuesday said the row between insurance regulator IRDA and stock market regulator Sebi about unit-linked insurance products (ULIPs) will be resolve very shortly.

Mukherjee added that even as the life insurance industry has made some development to arrive at out to semi-urban and rural areas, ''the general insurance still requirements to work harder.''

On ULIP, FM said he was alert of the recent issues in the life insurance industry, particularly these products.

He said. ''We will resolve this subject soon. I understand the IRDA has taken some very positive steps in respect of regulations of ULIPs which are in the importance of both the insurance industry as also the policyholders,''

Ulip string can hit business: Religare

Private insurance player Aegon Religare Life Insurance at present said if the turf war between the capital markets regulator Sebi and insurance regulator Irda over Ulips is not resolved at the first it will impact the industry.
"If the issue is not resolved in the next couple of months then it will crash the business," Aegon Religare managing director and chief executive Rajiv Jamkhedkar said, adding however, so far there is no impact on the unit-linked insurance products (Ulips) business and the companies do not have any need for new Ulips now.
On April 9, Sebi had banned 14 life insurance companies, as well as Aegon Religare, from raising funds through Ulips, which invest the premium money in equity and debt markets. But Irda asked insurance companies to overlook the ban and do business as usual as Ulips are an insurance issue and not that of securities market. Sebi reacted to this with a fresh order banning new Ulips.
This forced the finance ministry to interfere which asked the regulators to seek a legally compulsory opinion on the matter, following which the regulators moved the Supreme Court, which will hear the case in July.
Ulips constitute more than half of the total business of the life insurance industry. At the end of the last fiscal, Ulips comprised around 75(%) per cent of the total business of Aegon Religare which can be reduced to 65(%) per cent by the end of this financial as there will be increase in traditional products.
Jamkhedkar said the company will infuse up to Rs 470 crore to build up its branch network and hire over 15,000 in the current financial including 13,000 agents to support its expansion plans.

Max New York Life launches Four ULIP Plans

Private life insurer Max New York Life Insurance on Monday said it has updated its Unit Linked Insurance Plans (ULIP) portfolio by launching four products
.
The new products are Max New York Life Fortune Builder, Max New York Life Unit Builder Plus, Smart Invest Pension Super and Smart Express. All the four products are in fulfillment with the IRDA's regulation of capping of charge, the company said in a statement.

According to the standard all unit-linked products will have a standard charge organization not exceeding three per cent for ULIPs up to 10-year term and 2.25 per cent for ULIPs over 10-year term.

"In our new ULIP Plans, we have paid importance on the protection element and also introduced guaranteed reliability bonuses which clearly indicates on Life Insurance being viewed as a long-term protection product," Max New York Life Corporate Vice-President and head product management Manik Nangia said.

The elimination of humanity and morbidity charges from the cap has ensured that there will be no compromise on life cover, he said.

Max New York Life is a joint venture between Max India and New York Life, a Fortune 100 company.