IRDA EXPRESSES CONCERN AT POPULARITY OF UNIT-LINKED PLANS

India’s Insurance Regulatory & Development Authority (IRDA) has expressed concern at the popularity of unit-linked investment plans (ULIPs) over traditional savings-linked insurance products. IRDA chairman CS Rao said that “we are studying the impact of regulations on traditional policies. We want to examine whether there are features in traditional plans that inhibit their growth”. Life assurers have been reporting 100%-plus increases in new business premiums recently, mainly on the back of ULIPs, which have benefited from a rising stockmarket and general investor confidence. Mr Rao noted that insurers could be focusing on the sale of ULIPs as the investment risk is borne by the policyholder rather than by the seller. Because of this, the product imposes a lower solvency requirement on the insurer — about a fifth as much, according to a Business Standard report. Bajaj Allianz Life head of marketing Sanjay Jain said that “customers prefer ULIPs because of their transparent nature wherein they can decide returns at every stage. Customers want to take the benefit from the strong growth in the equity market, which they would not have benefited from with a traditional insurance product”.