Sebi-Irda tussle over Ulips is just an economic argument: Expert

The tussle between two sectoral regulators — Sebi and Irda — on the issue of unit-linked insurance policies (Ulips) will generate some knowledge for both insurance firms as well as the watchdogs, a top financial sector expert said.

"This is a valuable issue highlighted by both regulators. It will unfold some knowledge for insurance firms as well as both regulators," ICICI Securities managing director and CEO Madhabi Puri Buch told reporters on the sidelines of an event here today.

Describing what was happening between the two regulators as "an economic argument", Buch said all players would have to ultimately follow the laid-down guidelines.

"It is an economic argument. At the end of the day, we should not forget that there is some guidelines we have to follow," she said.

Capital market regulator Sebi on Friday last banned 14 life insurance companies from raising funds through Ulips. IRDA has, however, asked these companies to continue their business "as usual".

Ulips are plans sold by life insurers where the money collected from customers is invested into equity and debt markets and returns are linked to the same. Their regulation has become a bone of contention between the two regulators.

The turf war concerns the nature of Ulips which account for over 50% of the total life insurance business in the country.