SEBI bans 14 insurers from issuing ULIP; IRDA questions

Mumbai, Apr 10 (PTI) Market regulator SEBI has banned 14
life insurance companies, including those belonging to Tatas,
SBI, ICICI, HDFC and Reliance Anil Ambani group from raising
funds through unit linked schemes, a move on which insurance
regulator feels that the firms should take legal recourse.
Many of the affected companies said they would talk to
both Securities and Exchange Board of India (SEBI) and IRDA on
the issue, which has emerged as a bone of contention between
the two regulators.
Reacting to the order, IRDA Chairman J Harinarayan said,
"I don't think their (SEBI's) position is well founded."
Insurance companies have to take legal recourse since the
order was issued against individual companies and IRDA is not
party to it, he said.
Rejecting the arguments by insurance companies that ULIP
schemes are insurance products, a view endorsed by IRDA,
market regulator SEBI issued the order late Friday night.
"...in exercise of the powers...I hereby direct ... the
(14) entities not to issue any offer document, advertisement,
brochure soliciting money from investors or raise money from
investors by way of new and/or additional subscription for any
product (including ULIPs) having an investment component in
the nature of mutual funds."
Secretary General S B Mathur of The Life Insurance
Council-- an industry association of life insurers-- told PTI,
"we will take it with the regulator on Monday."
The players who have been prohibited from raising any
further money include big players like SBI Life Insurance
Company, ICICI Prudential Life, Reliance Life, Metlife India,
Aviva Life, Tata AIG Life, etc.
However, state-owned insurer LIC is not named in the
order, which further said in case these entities wanted to
raise funds through any such schemes they would have to obtain
the requisite certificate of registration from SEBI.
The Order was issued by SEBI whole time member Prashant
Saran, said. MORE PTI