Insurers give Ulips the overtake, set out traditional

With unit-linked insurance plans (Ulips) covered in controversy, life insurers have taken to launching traditional insurance products such as endowment plans and money back savings and security plans.

Bajaj Allianz Life Insurance has launched Invest plus Premier, a traditional plan that offers guaranteed investment return, while Birla Sun Life Insurance has approach up with a Bachat (Endowment) Plan.
Another new player, DLF Pramerica Life Insurance, which is not in the register of the 14 life insurers who have been issued a notice by the Securities and Exchange Board of India (Sebi) over Ulips, launched a savings-cum-protection plan called DLF Pramerica Dhan Suraksha this week.
As per Sebi, any new insurance product that has an investment part can be launched only after getting approval from it. The capital market regulator had on April 13, 2010 issued an order stating that it had set in abeyance the order prohibition fresh subscriptions “for any product (including Ulips) having an investment module in the nature of mutual funds, till they obtain the necessary certificate of registration from Sebi.” “With respect to any new Ulip scheme/ product launched after April 9, 2010, the directions mentioned in the said order will be imposed as indicated therein,” Sebi said.
But the industry says these launches are only coincidental.Akshay Mehrotra, head - marketing, Bajaj Allianz Life Insurance said, “We have consciously increased the composition of traditional products over the last 3-4 years to correct the irregular portfolio mix from 97% to 84%. That has been our constant measure so that the dependence is not on one single line of products. This has nothing to do with the controversy.”
Bajaj Allianz said that in 2005-06, 6% of its total portfolio was from traditional products and 94% from Ulips; in 2008-09, the share of traditional products increased to 7% and in 2009-10 the share is 16%.
Mehrotra had earlier said in a statement issued during the launch, “Customer insights had exposed that they prefer an easy-to-understand and easy-to-buy life insurance policy. With Invest plus Premier, we have incorporated these features besides offering “certain” benefits in these uncertain times.”
Others say that the launch of traditional products cannot be linked to the controversy as these were filed with the Insurance Regulatory and Development Authority of India long before the grass war erupted.
“Normally, once a product is filed with Irda, it takes two months or 60 days to get approval. If from June or July you see a spell of traditional products, then you can say it is linked,” said a source, not willing to be named.
Asked whether the launch was a conscious decision to overcome the Sebi order on new Ulips, SB Mathur, secretary general of Life Insurance Council, said, “What is the problem? Sebi has never had problem with traditional products.”