Bill on Ulip soon, says Govt
The government will come out with a Bill to replace the ordinance relating to clarification that the insurance regulator Insurance Regulatory Development Authority (Irda) would have control over the popular Unit Linked Insurance Product (Ulip) scheme.
“The government proposes to introduce a Bill to replace the Ulip ordinance. It is proposed to be introduced in the forthcoming monsoon session of Parliament,” Finance Secretary Ashok Chawla indicated here on Tuesday.
“Regulators have raised their points of view. The finance minister has taken note of those issues. The ordinance in whatever form has to be placed before Parliament,” Chawla said.
“It is matter of a few days when this (bill) will be tabled and everybody would know what the future course of action on this particular piece of regulation is,” he said. The government while issuing the ordinance giving Irda the powers to regulate the Ulip schemes set up a high level committee headed by the Finance Minister Pranab Mukherjee for sorting-out all issues of jurisdiction regarding hybrid products.
ULIPs—a common insurance plan sold by life insurers, where the money collected from consumers is invested into equity and debt markets— have become a bone of contention between the two regulators, with both claiming regulatory authority over the scheme.
The tussle between the two regulators was triggered on April 9 when Sebi banned 14 life insurance companies from raising funds through unit-linked insurance policies.
A day later, insurance sector regulator Irda asked the companies to ignore the Sebi order and do business as usual. Sebi argued that entities registered with it could operate such schemes as these are in the nature of mutual funds.
Irda terming the action of Sebi as “wholly misconceived and without jurisdiction” has said it would have brought the insurance industry to a “stand still” seriously jeopardizing the interests of the policy holders and the interests of the insurers.
It would have resulted in “complete drying up of the revenue flows to the insurance companies which could disrupt the payment of benefits on maturity, on death and on other admissible claims, putting the policyholder and the general public to irreparable financial loss”, Irda has pointed out.
Subsequently, he asked Sebi to keep its order banning life insurance firms from raising funds under the Ulip route.
