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Though the Insurance Regulatory & Development Authority (Irda) is leaving no stone unturned to stop capital market regulator Sebi from encroaching its exclusive turf on regulating the unit-linked insurance plans (Ulips), life insurers are now gearing up for any eventualities.Life insurers, who had started the new fiscal with enthusiasm on the backdrop of faster economic recovery and better-than-expected performance in 2009-10, are now reducing their Ulip sales target for the current year.During 2009-10, out of over Rs 1 lakh crore of total fresh insurance premium, almost 80% to 85% had been generated from Ulip sales by the 23 life insurers."We will like to bring down the ratio between Ulip and traditional products sales to 50:50 from 64:36 achieved during the last fiscal," said Life Insurance Corporation (LIC) managing director DR Mehrotra.The life insurance behemoth with 65% of the market share will push more conventional products with guaranteed returns during the year and is now planning to launch new traditional products, he added. This is despite the fact LIC is not a part of the list of insurers which have been asked to launch new products. LIC, at Rs 54,000 crore, is targeting around 25% growth in mobilisation of fresh premium during the current fiscal.There is a possibility that Ulip sales may be affected due to external factors (including the Sebi-Irda spat) that have cropped up during the last few days. Though withdrawals (customers surrendering their Ulip policies) have not started as yet, still, some kind of anxiety is there on the whole issue, he said.LIC, which has got the largest basket of conventional products, is now trying to re-launch its existing traditional products. The corporation has launched reorientation programme for the agents on selling traditional products.Rajesh Sud, CEO & managing director of Max New York Life, said though the company has felt the impact of Sebi-Irda spat on its performance in April, it believed that the problem would persist for the short term. It will depend on the company to strike the balance between Ulip and traditional products, he said."Though in April, which is a period of lean season, has not seen any impact of Sebi-Irda spat on the sale of our Ulip products, if the situation remains like this for long, we may get hit,'' said IDBI Fortis MD & CEO GV Nageshwara Rao.K Sahay, CEO, Star Union Daiichi, said, "Being a lean period, there is no impact of Sebi-Irda spat over the sale of Ulips. Still, I do believe that some slowdown can be observed in the beginning, once the peak season starts. I am also getting queries from my policyholders in connection with the withdrawal of policy.''Intermediaries who depend on commissions for their income would get some kind of comfort as selling traditional products ensures better and safe income, said Mehrotra.On Friday, Supreme Court had issued notices to 14 life insurers (which were earlier barred by Sebi from selling Ulips), Irda and the Centre while hearing the Sebi petition to transfer two public interest litigations(PIL), originally filed in Allahabad High Court and Bombay High Court, had set the next date of hearing on July 8.The scenario started turning uncertain for life insurers after Sebi issued notices to 14 life insurers asking them not to sale Ulips without registering themselves with it (Sebi). However, Irda had asked these life insurers to ignore the Sebi fiat and continue business as usual.Sebi's stand has been that Ulips, having investment component akin to mutual funds, are need to be regulated by it.
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