IRDA awaits Sebi's reply letter on showcause to insurers

The Insurance Regulatory and Development Authority (IRDA) today said it is awaiting market regulator Securities and Exchange Board of India's (Sebi) reply on a letter written in response to the showcause notice issued to life insurance companies.

The Sebi, in a showcause notice last month, asked life insurers why they had not taken its prior approval before launching ULIPs.

"We have written a letter to Sebi. We do not know that whether we are going to have discussion (on the issue) with the Sebi... The ball is in Sebi's court," IRDA Member R Kannan told reporters here today.

The IRDA has recently replied to the showcause notice, Kannan added.

The insurance regulator, in its reply, is understood to have taken the stand that regulation of ULIPs by IRDA was well laid down and that it did not agree with Sebi's contention that insurers needed a certificate of registration from the market regulator for dealing in ULIPs.

"Now, Sebi has to reply to our letter. Once, we have written a letter, somebody has to respond," the IRDA chief said.

If the market regulator was satisfied with IRDA's reply, then the matter would naturally be closed, Kannan said.

"However, in case Sebi is not satisfied, it may raise some questions and we will wait till that time," he said.

The Sebi, in its notice to life insurance companies had argued that the structure of ULIPs is similar to that of mutual funds and is in the nature of collective investment schemes which comes under its purview.

ULIPs are those insurance products where a part of the premium goes towards providing life cover while the balance is invested in stocks or bonds.