As the IRDA & SEBI tussle over ULIPs gets into a prolonged battle- it seems to have started claiming its first victims.
In a bid to make Life Insurance sales come closer to the transparency levels in Mutual Funds, IRDA has mandated all Life Insurers to clearly spell out the commission structure on their policies.

This means that any customer would henceforth know how much of his/her first year premium is being pocketed by the sales guy. This could give a lot of bargaining power in the hands of the consumers. As it is, the market is known to have numerous instances of agents passing back a part of their commission to customers to close sales. With this - one can only expect such dubious sales processes to increase.

Not surprisingly, most insurers are unhappy with the move & they feel that such disclosures on margin structures are not really required.

Securities & Exchange Board of India (SEBI) and the Insurance Regulatory & Development Authority (IRDA) have initiated dialogues to come up with an agreeable regulation regarding the star product of India's Life Insurance industry- Unit-linked insurance plans (Ulips).

SeEBI spokesman announced that SEBI had agreed to explore various ways to resolve the matter. SEBI Chairman CB Bhave had an hour long meeting with the IRDA Chairman J Hari Narayanan.

The trigger for the meeting was the show cause notices issued by Sebi to life insurance companies for selling ULIPs without an explicit prior approval from SEBI.

IRDA maintains that the unit-linked plans were approved by them under the Insurance Act. SEBI's contention is that ULIPs if sold under collective investment schemes should come under their purview.

The final decision will have significant impact on the Insurance Industry as the ULIPs are a substantial portion of new policies sold in the industry