Insurance
Insurers to meet IRDA chairman next week to protest against new norms

Insurers will be going to IRDA for protesting against the new norms on ULIPs and seek a change, as many in the sector believe that these financial instruments will become less attractive after the proposed regulatory changes

It has been nearly two weeks since the Insurance Regulatory and Development Authority (IRDA) came out with its new 'consumer-friendly' norms for Unit-linked Insurance Plans (ULIPs). However, these norms have disheartened many insurance companies as it makes the product less attractive. Now Moneylife has learnt that chief executives of various insurance companies will be meeting IRDA chairman J Hari Narayan next week to re-design these norms.

"Chief executives from various companies - mostly private insurers and the (members from) the Life Insurance Council will be meeting Mr Narayan, so that we can ask IRDA to change the (proposed) norms, if not, at least make it less harsh for us," a private insurer who preferred anonymity told Moneylife.
According to the official, insurers would ask to remove the norm which states that all pension products in ULIPs should guarantee a return of 4.5% to protect lifetime savings from adverse fluctuation at the time of maturity, and the way commissions have to be paid.

The thorniest issue for insurers is the stipulation that all pension products should guarantee a return of 4.5% at the time of maturity. Insurers believe that this would not be possible for a long-term product and investments in ULIPs will now go to safer outlets.

Earlier, we had spoken to GN Agarwal, Future Generali India Life Insurance's chief actuary and chief risk officer regarding the issue. He said that the 4.5% assured return would have a "drastic" impact on the industry. According to him, more than 50% of ULIPs will be withdrawn from insurance companies and nearly all pension plans linked with ULIPs will be pulled out. He went on to add that insurance companies whose revenues were solely based on ULIPs would be severely affected.

As per the guidelines which would be applicable from 1st September, the regulator has mandated that commission charges for ULIPs will be distributed evenly over the entire lock-in period, which has been extended to 5 years. IRDA has capped the charges at 4% annually for 5 years, and 3% for 5-10 years and 2.25% for products of above 10-year terms.
 
This is a move by the insurance lobby to get a better deal for ULIPs. However, a few private insurers told Moneylife that the IRDA chairman is not likely to accede to their requests. Various regulatory and governmental pressures would make the insurance watchdog stick to its stand.

On 28th June, IRDA issued a new set of guidelines for insurers to comply with. The guidelines have increased the lock-in period for ULIPs from three to five years mainly to ensure that they become a long-term insurance product rather than a short-term investment option. During this period, no residuary payments on lapsed, surrendered or discontinued policies will be made. Top-up on insurance premiums will now be treated as a single premium, meaning that every top-up that one makes will have to have an additional insurance cover backing it up as well.
ULIPs are hybrid products that combine elements of investment and insurance, and have been a big investment magnet for insurance companies. According to the Life Insurance Council, an industry body representing 23 life insurers, of the Rs2,00,000 crore-plus life insurance premium collected in the first 11 months of the past fiscal, more than Rs91,000 crore came from ULIPs.

User

COMMENTS

rajesh kothari

6 years ago

In Health Insurance people are been fooled by terms & conditions and insured are paid very less amount and charged higher premium. Irda must takeup the matter and form one rule and secure the insured.

rajesh kothari

6 years ago

ulips policies should be ban for ever, it misguides the insured about the returns and also their risk cover during the term of the policy.

yogendra

6 years ago

Dear sir,
If we observe the conflict between IRDA and SEBI....
The both institutions are working for the betterment of investor,otherwise also no justification is accepted of LI companies that fund value is less than invested premium after the period of 5-10 yrs
IRDA must have notice this fact,peace of
Regards
Yogendra

Pradeep kumar gaur

6 years ago

Dear sir, I am policy holder of LIC OF INDIA Address of branch office Branch-1, Model town, Ghaziabad.Sir I take a policy by LIC Jeevan Saral My mode of Payment by ECS of my bank A/C No. 88902200040848 Syndicate bank, shastri nagar, Ghaziabad. But ECS not present in my bank account, but LIC charge by me of always, please take action of this branch. Policy No.255735628, 255735621.

Pradeep kumar gaur

6 years ago

Dear sir, I am policy holder of LIC OF INDIA Address of branch office Branch-1, Model town, Ghaziabad.Sir I take a policy by LIC Jeevan Saral My mode of Payment by ECS of my bank A/C No. 88902200040848 Syndicate bank, shastri nagar, Ghaziabad. But ECS not present in my bank account, but LIC charge by me of always, please take action of this branch. Policy No.255735628, 255735621.

Yogendra

6 years ago

Good news for invester...........
Invester will get return on heigher side.for their hard earn Income.
Transparancy must be their in every Policy

DILLIP

6 years ago

L.I. COMPANIES ARE MANAGED BY CEO'S NOT BY IRDA CHAIRMAN. GOVT. & IRDA RULES TO FAVOUR LI COMPANIES NOT TO POLICY HOLDERS.

sreepathi

6 years ago

The rate of expenses should have fallen more.
Can any body guess why such changes are taking place?
Because SEBI wanted to take care of ULIP and IRDa should show the world that they are also investor friendly.
The move is long awaited and let us hope the Ins.cos will not weaken it.

kaulagi

6 years ago

The new norms are disturbing the insurance companies and not the public. Insurance companies are for public and not the public for insurance companies. A sincere trial of the new norms should be made as has been made by MF industry. Advisors should be trained to follow the new norms.

R Balakrishnan

6 years ago

The Lame Will Walk Again...

The Blind Will See Again...

The Sick Will Be Healthy Again...
...
The Old Will Be Young Again...

The Obese Will Be Thin Again...
And buying ULIP's will give you returns.

L&T-MHI joint venture starts production of power generation equipment

Engineering and construction company Larsen & Toubro Ltd (L&T) said its joint venture with Mitsubishi Heavy Industries (MHI) and Mitsubishi Electric Corp (MELCO) started production of turbine generators and boilers at their new facility at Hazira in Gujarat.

L&T-MHI joint ventures are the second in India to produce power generation equipment locally. L&T will invest about Rs3,600 crore in the power equipment manufacturing units.

Each of the two factories is capable of producing 4,000 MW of power generating equipment annually. In addition to the turbine and boiler factories, L&T is also setting up factories for axial fans, air-preheaters, electrostatic precipitators, high pressure piping and a forge plant, it said in a regulatory filing.

On Thursday, L&T shares closed 0.5% down at Rs1,874 on the Bombay Stock Exchange, while the Sensex ended at 0.2% up at 17,909 points.

User

Bank of Maharashtra gets Rs588 crore from government

State-run Bank of Maharashtra said it received Rs588 crore from the Government of India as capital infusion that will help the lender to expand its business.

The instrument used is perpetual non cumulative preference shares (PNCPS) has an annual floating coupon to be benchmarked to repo rate with a spread of 100 basis points to be re-adjusted each year. The PNCPS will be a part of Tier I Capital, it said in a regulatory filing to Bombay Stock Exchange (BSE).

On Thursday, Bank of Maharashtra shares closed 0.7% higher at Rs60 on the BSE, while the Sensex ended at 0.2% up at 17,909 points.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)