New Delhi, April 12 (Inditop.com) The government Monday sought to bring about a truce between two financial markets regulators who had issued contradictory orders on sale of equity-linked plans by insurance companies, even as existing investments were termed safe.
“We need to look at both the orders internally,” Finance Secretary Ashok Chawla told reporters here ahead of a meeting with the top brass of the Insurance Regulatory and Development Authority (IRDA) and the Securities and Exchange Board of India (SEBI).
The government’s intervention came after the markets watchdog barred 14 insurers from selling these plans without its prior approval beginning Saturday, after which the insurance regulator asked these entities to ignore the order a day later.
But both the regulators and the government also sought to assure investors that their investments were safe in these unit-linked insurance plans, one of the most popular investments in the country, also called ULIP.
“I think we will have greater clarity on the respective jurisdictions. Investments are safe,” IRDA chairman J. Hari Narayan said, as the three sides prepared to meet on the contentious issue at North Block, the headquarters of the finance ministry.
“I don’t think I have come here for a decision. I’m here to give a perspective on the issue — SEBI does not have jurisdiction on ULIP products. SEBI believes otherwise,” Narayan said.
The insurance regulator feels the markets watchdog’s move may force premature surrender of insurance policies, causing substantial loss to the policyholder and to the insurers, destabilising the markets and upsetting the financial stability.
But SEBI feels since these products have a major equities component they certainly came under its jurisdiction and it was only fair to regulate their business so as to prevent any move that may go against the interests of investors.
The affected insurers are Aegon Religare, Aviva, Bajaj Allianz, Bharti AXA, Birla Sun, HDFC Standard, ICICI Prudential, ING Vyasa, Kotak Mahindra, Max New York, Metlife India, Reliance Life, SBI Life Insurance and TATA AIG.
During the first 11 months of the previous fiscal, a total of 1.67 million policies were sold with a total premium of Rs.44,611 crore ($9.9 billion). The total premium involved in these products amounted to Rs.90.645 crore (little over $20 billion).
