Insurance panel lifts Sebi ban

The Insurance Regulatory and Development Authority on Saturday overturned the ban imposed by market regulator SEBI on 14 private insurance companies from raising funds through unit-linked insurance policies and asked them to continue with their business as usual.

With this, IRDA and SEBI have locked horns publicly on this ticklish issue that had insurance firms in a tizzy all through the day.

Late on Friday night, SEBI issued an order preventing the 14 private firms including those belonging to the Tatas, Reliance Anil Ambani Group, SBI, ICICI Bank and HDFC from raising funds through ULIPs and asking them to register with the market regulator if they wanted to continue their business.

The order created much consternation in the firms on the status of the existing subscribers. They were also not sure whether they could collect the premium when the time comes for renewal. Public sector insurer LIC did not come within the ambit of the order.

In his 11-page order, Mr Prashant Saran, a whole-time member of SEBI, said the attributes of the ULIPs offered by the companies were different from the traditional insurance products and they were a combination of insurance and investment. This made them akin to mutual funds.