SEBI order on ULIPs a wake-up call for IRDA

SEBI order on ULIPs a wake-up call for IRDA

Chennai, April 12: The order of Securities and Exchange Board of India (SEBI) banning 14 life insurers from selling unit-linked insurance products (ULIP) is a wake-up call for the Insurance Regulatory and Development Authority (IRDA) to set its and that of the life insurers' house in order, say insurance officials. Though they do not agree with the manner in which SEBI issued its ban order Friday night asking life insurers to stop ULIP sales with immediate effect, officials of life insurance companies say something like this was needed to shake up IRDA.

“All is not well starting from the kind of products that are approved by IRDA to the way it is sold to the policy holders, the high commissions paid to the corporate brokers/bancassurance parters in excess of the legal stipulation,” a senior official of a life insurer told IANS on the condition of anonymity. “It is really ironical that IRDA, which had asked life insurers to defy SEBI's order, is talking about policy holder’s interests,” he said.

“The SEBI order is really a wake-up call for IRDA as to the kind of products it approves (many are purely investment products), the market malpractices and also the way it approves the appointment of top management of life insurers,” another senior official told IANS. “Life insurance is really a long-term business. But what we see and hear is the CEOs and marketing managers talking about top line growth, payment to distributors and paying scant respect to the interests of policy holders,” he added.