Chennai, Sep 2 (Calcutta Tube) The kicking in of new norms for unit linked insurance policies (ULIP) issued by Insurance Regulatory and Development Authority (IRDA) Wednesday has sucked out around 260 products sold by 23 life insurers in India.
And life insurers have to make their till boxes ring with around 50 ULIPs – at an average of two new ULIPs for each insurer.
Eleven life insurers have to scrap ten or more policies and for others the scrap numbers ranges between nine and three.
The life insurers have to contend with the two ULIPs for some time now till they file their applications to IRDA for further product approvals.
Major product losers in the private sector are Reliance Life, ICICI Prudential, Tata AIG, HDFC Standard Life, Bajaj Allianz Life, Birla Sun Life, Kotak Mahindra, Aviva Life and Bharti Axa Life.
Asia’s largest life insurer and owned by the Indian government Life Insurance Corporation of India (LIC) had to scrap nine of its ULIPs while it got two new products in their place.
‘There may not be any major impact for the life insurers. At any given point of time only two or three products will be fast moving for a life insurer. Now most of the insurers have two products,’ IndiaFirst Life Insurance’s Managing Director P. Nandagopal told IANS.
IndiaFirst Life has two new unit-linked insurance plans (ULIP) as it had to scrap its three old ULIPs as they did not conform to the new norms laid down by IRDA.
The trend of banning products by IRDA started in 2007 when the insurance regulator stopped selling actuarial funded (exotic policies not easily understood by policy holders) products.
The two major companies that got affected then were Bajaj Allianz Life and Aviva Life.
At that time the ban was said to be the result of corporate rivalry.
In 2009 IRDA for the first time brought out a new regulation that capped the charges levied on insurance polices this in turn sucked out sizeable number of products from the market.
According to the Secretary General of Life Insurance Council S.B. Mathur, from around 500 ULIPs in the market Dec 31, 2009, the number has come down to around 250.
In 2010 after the turf war between Securities and Exchange Board of India (SEBI) and IRDA, the latter brought out a real policyholder friendly ULIP regulations which in turn has taken out around 260 products out of the market.