New Delhi, April 10
In a piquant situation, insurance regulator IRDA today rejected the market regulator SEBI’s ban on life insurance companies to raise funds through ULIPs (unit-linked insurance policies) and asked them to do business as usual.

Taking SEBI head on in the turf war over who would administer the ULIP scheme, IRDA in a surprise order told 14 affected companies that it had set aside the ban order. Neither SEBI chairman CV Bhave nor its spokesperson could be contacted for comments.

IRDA’s order comes within 24 hours of SEBI banning 14 insurers, including those belonging to the Tatas, Reliance Anil Ambani Group, SBI, ICICI Bank and HDFC among others from raising the funds through ULIPs.

Hours before the IRDA order, Finance Secretary Ashok Chawla said it was an issue that needed to be settled by the two regulators.

“It’s a matter between the regulators, so they have to decide,” Chawla said.

“Sebi has taken a legal process. So, let’s see what happens,” he added.

IRDA in its order late tonight said, “All 14 insurance companies which are mentioned in the order of SEBI are directed to note that notwithstanding the said order of the SEBI, they shall continue to carry out insurance business as usual, including offering, marketing and servicing ULIPs in accordance with the Insurance Act”.

SEBI in its order issued last evening asked as many as 14 life insurance companies not to raise money for ULIPs without obtaining the certificate of registration from the market regulator. Describing the SEBI action as “wholly misconceived and without jurisdiction,” IRDA said it would have brought the insurance industry to a ‘stand-still” and seriously jeopardise the interests of the policyholders and the insurers, the IRDA order said.

It would have also resulted in “complete drying up of the revenue flows to insurance companies which could disrupt the payment of benefits on maturity, on death and on other admissible claims, putting the policyholder and the general public to irreparable financial loss”, it said. “The financial position of the insurers will be seriously jeopardized, thus, destabilising the market and upsetting financial stability”, IRDA added. — PTI