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शनिवार, अप्रैल 10, 2010

ULIP Policies Banned By SEBI, 14 Insurance Companies Banned From Doing Business

Market regulator Sebi banned issuance of Unit-Linked Insurance Plans, popularly known as ULIPs, by life insurance companies.

Sebi has asked 14 private insurance companies, including market leaders like SBI Life, ICICI Prudential Life and Reliance Life Insurance, not to issue any more ULIP products. 

The Sebi order does not cover state-owned insurance major LIC. There is no immediate clarity on the fate of existing products.

At present, over 70% of the new business premium for most insurance companies come from ULIPs, running into thousands, if not lakhs of customers. The genesis of the Sebi order goes back to the feud between MFs and insurance companies.

The 14 major insurance companies list are below:
  • SBI Life
  • ICICI Prudential
  • Aegon Religare Life
  • Birla Sunlife
  • HDFC Standard Life
  • ING Vysya Life
  • Kotak Mahindra old mutual life
  • Aviva Life
  • Bajaj Allianz
  • Bharti AXA
  • Max New York Life
  • Metlife India
  • Reliance Life

Between 2005 and 2008, when the stock market was on a bull run, MFs lost business but insurance companies mopped up large sums of money through ULIPs.

In December 2009 and January 2010, Sebi had issued show cause notices to 14 insurance companies asking them why action should not be initiated against them for issuing investment products without Sebi’s permission. On Friday, Sebi wholetime member Prashant Saran passed the order putting a ban on ULIP products by these 14 insurers.

One of the main contentions for Sebi was that although a ULIP is an insurance product which comes under IRDA, part of it is also an investment product which should ideally be regulated by Sebi. 

Report By ET

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