Irda changes unit plan disclosure norms

In a move that took many insurance companies by surprise, the Insurance Regulatory & Development Authority (Irda) today shifted disclosures regarding unit-linked insurance plans (Ulips) under the head of controlled fund.

As per the investment guidelines, investments under controlled funds are regulated by the Insurance Regulatory and Development Authority (Irda). For instance, for traditional policies, 50 per cent of the fund is invested in government securities, 15 per cent in infrastructure and 35 per cent in equity and other approved securities.

Whereas, under Ulips, investment decision is left at the discretion of the policyholder. Insurers, however, disclose all investments both Ulips and traditional on an annual basis in their financial statement.

Until now, under Section 27A of the Insurance Act, controlled fund for a life insurance companies included traditional, annuity funds and shareholders fund. To insurance companies’ surprise, Irda today brought Ulips under the definition of controlled funds.

“Controlled fund for a life insurance company will include traditional and unit-linked life assurance funds (group, individual), annuity funds and shareholders fund,” said Irda.

Insurers said the disclosure might be brought within the collective funds head, but investment cannot be regulated within the same section.