Irda to issue new norms on Ulips

Though the finance ministry has cleared the air of confusion over who will mother unit-linked insurance plans, the market will have to wait for the launch of Ulips.

Following criticism the product has drawn from various quarters the regulator has decided to raise the bar for the product.

A senior official with the Insurance Regulatory and Development Authority (IRDA) told DNA Money new guidelines will be released either today or tomorrow.

Among the changes expected to be announced by the regulator are an increase in the risk-based insurance portion and a reduction the high upfront charges.

A proposal to make it mandatory for all insurance plans including pension plans to have a life insurance element could also be included.

Fixed assurance products on the Ulip platform, too, are being mulled.

New Ulips can be launched only after the guidelines are announced, the Irda official said, requesting anonymity.

As such there is no product approved for launch right now. “Even though the regulator was not declaring it officially, no products filed for have been cleared in the past two months since there was pressure on Ulips,” an industry source said, asking not to be named.

Even the insurers are eager to get the guidelines so that they can send their prospective offers for regulatory approval.

The chief of a life insurance company told DNA Money, “We will have to see what the new guidelines are and then file for insurance products. We can’t file for more products as it doesn’t make sense to file and refile. We will see the final guidelines.”
But insurers are thanking their stars as the entire controversy unfolded during the slack sales period.

“Usually April is the smallest month and it starts to progress month after month. It is progressive and from July onwards it starts to pick up,” said Rajesh Sud, chief executive officer and managing director of Max New York Life Insurance Company.

Irda usually has a window of 30 days for products to be cleared, he added.

On Friday, an ordinance promulgated by the President clarified that life Insurance business includes “any unit linked insurance policy or scripts or any such instruments.” This sets aside the ban that the capital market and mutual fund regulator Securities and Exchange Board of India (Sebi) had imposed on fresh Ulip issuances by 14 life insurers unless an approval was sought from it.