Wednesday, July 28, 2010

Ulip Controversy

Government – Finance Ministry
August ‘09
Abolished entry loads for mutual fund schemes
December ‘09
Issued show-cause notices to some life insurers asking why action should not be taken against them for selling ULIPs without its approval
January ‘10
Again questioned Insurers about not seeking Sebi’s permission over issuance of Ulips
February ‘10
“ULIPs are broadly similar to the mutual funds, except that they are required to segregate a certain part of the premium towards the life insurance of the plan holder.”
March ‘10
“Ulips globally are managed by insurance regulators, and under no circumstance will we let Ulips to be taken over by Sebi.”
Issued order to ban 14 private insurance companies from issuing/servicing Ulips
“…they (Insurers) shall continue to carry out insurance business as usual including offering, marketing and servicing ULIPs in accordance with the Insurance Act, 1938, Rules, Regulations and Guidelines issued there under by the IRDA.”
Finance Secretary Ashok Chawla said that it was an issue between the two regulators and they should resolve it among themselves
Talks to order ban on 9 more insurers including, state owned LIC
Finmin interved and status quo was restored. Matter to be settled in court.
Asked Irda and Sebi — to “jointly seek a binding legal mandate from an appropriate court.”
Issued second order that exempted existing Ulips from the ban, but said its nod was must for issuing new Ulips.
“It could take another one or two days to arrive at a decision” – on future course of legal action.
“We need to look at both the orders internally and discuss it”
“There is no fresh clarification. The earlier one stands good.” – on ban on issuance of new Ulip products.
Moved the Supreme Court and some high courts (including
high courts of Delhi, Bombay and Hyderabad) to guard against any ex parte decision.
Supports Sebi’s April 13 order; says directions issued were in keeping with the agreement worked out with the insurance regulator.
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