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| Insurers to review MF covers | |
| Bs Reporter / Mumbai October 01, 2008, 21:51 IST | |
The Insurance Regulatory and Development Authority (Irda) on Tuesday advised the Life Insurance Council, a self-regulatory body of insurers, to review and put on hold the decision to discontinue group covers on mutual fund (MFs) products. The council had earlier decided to discontinue the group life insurance cover on mutual fund products with effect from October 1.
“The insurance council had taken a unilateral decision. However, now both Irda and Sebi would discuss and harmonise the issue. Meanwhile, MFs can carry on offering the cover,” said Association of Mutual Funds in India (Amfi) Chairman A P Kurian, speaking to Business Standard.
After a recent dispute with mutual fund companies, which wanted to collect insurance premium by hawking policies along with their schemes, life insurers earlier this month had decided to end the system of bundling on a host of financial products.
Currently, Reliance Mutual Fund and Birla Sun Life Mutual Fund offer systematic investment plan (SIP) products with insurance policies. Both fund houses were going to stop the products after September 30.
For long, asset management companies (AMCs) have complained of life insurers invading their turf with unit-linked insurance plans (Ulips), which have a predominant equity bias.
The Life Insurance Council data showed that over 80 per cent of the business generated by life insurers came from Ulips and made them the largest domestic institutional investor in the stock market. In 2007-08, life insurance companies invested Rs 55,000 crore in equities compared with Rs 53,400 crore by foreign institutional investors and Rs 16,300 crore by mutual funds.
Fund houses, under the aegis of Amfi, had approached Sebi last month to permit them sell insurance products to their investors and collect premium from them. At present, regulations bar AMCs from venturing into this segment.
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