IRDA not to change ULIP norms

August 11, 2010 03:14 pm | Updated 03:14 pm IST - New Delhi

Insurance regulator IRDA on Wednesday said it will not tweak its proposed guidelines on unit-linked insurance products (ULIPs) even as the industry fears that the norms, to be effective from next month, could squeeze their profits in short-term.

“We have considered all that (the proposed guideline) and we do not see any need for vary from the regulations already there. We will have to balance the profits of insurance companies with what is right and proper,” IRDA chairman J. Hari Narayan told reporters.

The regulator, in June, had come up with new guidelines for ULIPs under, which the investments would be locked in for five years, up from three years now.

Also, the agents’ commission would be reduced and even if investors opt out earlier, the discontinuance charges will be lower than they were before.

Insurance companies are of the opinion that the capping of surrender charges and the even distribution of charges over the lock-in period of five years will adversely impact the profitability of companies.

When asked whether the profitability of the insurers would be impacted, he said, “I do not think that the performance would be significantly impacted in this fiscal or next fiscal.”

He said the insurance companies will have to contain expenses to maintain revenue in the long run.

“The insurance companies require getting back to a much reasonable expense pattern for sustainability. We do not want to spin the industry to a high cost sector,” Mr. Hari Narayan said.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.