SEBI bans 14 insurance companies from selling ULIPs and it has a far reaching implication than anyone can think, 0n May/04/2009 after a article in business line ( Link is posted below) which is excellent article to read I posted with my view saying ULIPS scheme are mis-guiding and mis-selling and many intermediaries have sold to their clients just because the commission is very high and now regulatory authority have woken up and creating more damage. ULIPS collection in last 2years till Feb2010 alone is around 1, 35,000crs and SEBI problem is the total sum assured is very less while major proportion goes to stock market which has to be regulated http://www.sebi.gov.in/cmorder/ULIPOrder.pdf
Negative For stock market:If regulated there can be major withdrawal as many have made losses in these schemes already and now confusion will only add to more withdrawals where stock market can face some pressure in short term, 70-80% of Insurance investment comes to stock market comes from ULIP scheme and Insurance companies have been bigger investor than MF.
SEBI has banned 14 major insurance companies from raising money from the public for any unit-linked insurance products (ULIPs), fueling a fresh war between SEBI and insurance watchdog IRDA.
The 14 companies are 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.
SEBI said the entities have not obtained any registration from the regulator though the ULIPs launched by them had an investment component in the nature of mutual funds. The order is to come into force with immediate effect.
SEBI order has more far reaching implications than a press release or a circular. Since the order has been issued under Section 34(i) (a) and (b) of the insurance Act. IRDA has said that in the year `08-09 ULIP policies involving a total premium of Rs 90,645cr were in force. In fiscal `09-10 upto February 16.7 lakh policies have been sold with a premium of Rs 44,611crores. “It is also observed that the 14 insurance companies have an equity capital of Rs 16,281cr as on March 2009” IRDA said. http://economictimes.indiatimes.com/personal-finance/insurance/insurance-news/Regulatory-battle-IRDA-sets-aside-SEBIs-order-on-ULIPs/articleshow/5782853.cms
http://www.thehindubusinessline.com/mentor/2009/05/04/stories/2009050450261100.htm Insurance is not a good investment option
The investment part of any insurance product can be adequately addressed by mutual funds, which are much less expensive and also rank much higher in disclosure levels.
http://economictimes.indiatimes.com/personal-finance/insurance/insurance-news/SEBI-nod-must-for-ULIPs-by-insurance-companies/articleshow/5780744.cms SEBI nod must for ULIPs by insurance companies
The finance ministry today kept a safe distance from the ongoing row between market regulator SEBI and insurance watchdog IRDA over ULIPS, saying the two regulators have to resolve the issue. http://economictimes.indiatimes.com/personal-finance/insurance/insurance-news/Ban-on-ULIPs-Govt-says-regulators-have-to-settle-it/articleshow/5782507.cms
SEBI decision to bar insurance companies from collecting money in the popular ULIPS is likely to unnerve investors early this week. Brokers said that there were concerns that an extended ban on Ulips would impact money flows into stocks, as insurers have been among the top investors in Indian equities, thanks to the demand for this product. Ulips constitute almost 70-80% of insurers monthly inflows. http://economictimes.indiatimes.com/personal-finance/insurance/Sebi-Irda-row-may-unnerve-investors/articleshow/5785829.cms
SEBI decision to bar insurance companies from collecting money in the popular ULIPS is likely to unnerve investors early this week. Brokers said that there were concerns that an extended ban on Ulips would impact money flows into stocks, as insurers have been among the top investors in Indian equities, thanks to the demand for this product. Ulips constitute almost 70-80% of insurers monthly inflows. http://economictimes.indiatimes.com/personal-finance/insurance/Sebi-Irda-row-may-unnerve-investors/articleshow/5785829.cms
