Insurance regulator IRDA on Tuesday said it will decide its future course of action on the ULIP controversy in the next two days keeping in mind the government's directive to seek a legally binding decision from a court. "It could take another one or two days to arrive at a decision," Insurance Regulatory and Development Authority member R Kannan said.
The regulator is examining various options to deal with the situation in light of the government's decision, he said, adding, "Finance Minister's direction is absolutely clear." Finance Minister Pranab Mukherjee on Monday asked the two warring regulators--IRDA and Securities and Exchange Board of India -- to "jointly seek a binding legal mandate from an appropriate court" on the oversight of Unit Linked Insurance Products.
Finance Secretary Ashok Chawla had hinted that the appropriate court could be a High Court, though it is not yet clear whether it would be Mumbai or Hyderabad, where the headquarters of SEBI and IRDA headquarters are respectively located. The government had to intervene in the matter following conflicting orders passed by SEBI and IRDA over regulation of ULIP, an insurance product where a part of the fund is invested in equity markets.
On Friday, SEBI banned 14 life insurance companies from selling ULIPs till they obtained registration from the market regulator. Within 24 hours, IRDA asked the companies to ignore the SEBI ban order and continue doing business as usual.
The companies that the Sebi order banned from raising fresh money through Ulips were SBI Life, ICICI Prudential, Tata AIG, Aegon Religare Life, Aviva Life, Bajaj Allianz, Bharti AXA, Birla Sunlife, HDFC Standard Life, ING Vysya Life, Kotak Mahindra Old Mutual Life, Max New York Life, Metlife India and Reliance Life.
About 7.03 crore ULIP policies involving a total premium of Rs 906.45 billion (Rs 90,645 crore) were in force in 2008-09. As many as 16.7 lakh policies were sold with a premium of Rs 446.11 billion (Rs 44,611 crore) during April-February 2009-10. Mukherjee, while intervening in the matter, restored the status quo ante suggesting that business will continue as usual till the two regulators seek an order from a court on the issue of jurisdiction over ULIPs.
