Govt asks SEBI,IRDA to move court to resolve row

Unable to find a solution to the recent regulatory tussle between the capital market and insurance regulators,the government today...

Unable to find a solution to the recent regulatory tussle between the capital market and insurance regulators,the government today asked both insurance and capital market regulators to move an appropriate court immediately.

We want them to go to the court at the soonest. The Finance Minister has mentioned status-quo ante,which means that whatever prevailed before the date of the SEBI order will continue unhindered… that is what SEBI has said, said Finance Secretary Ashok Chawla.

Meanwhile,Insurance Regulatory and Development Authority,or IRDA,has already drafted major contours of its application to be presented to the court. The draft will be presented to the IRDA Council tomorrow and finalised soon, said a government official.

Despite a statement by the finance minister on Monday stating that status-quo ante is being restored till the time a binding legal agreement is reached by the two regulators,Sebi on Tuesday again issued a fresh notice to life insurance companies barring them from launching any new unit-linked insurance products (ULIPs) without its prior approval. There is no clarity on whether insurance companies will abide by the recent order or ignore ut. We havent got any fresh directive from the regulator, said Life Insurance Council secretary general SB Mathur.

The recent spat has already started affected the sales of insurance companies. Customers are getting worried and the number of calls to our call centres has increased manifold. Im afraid the way this tussle is shaping up,it will prove disastrous for the life insurance players, said the head of a private life insurance firm.

According to some industry experts,a possible truce can be achieved by allowing mutual fund companies to manage the investment portion of the life insurance companies. Globally,the investment portion of life insurance companies is managed by asset management companies. At present,life insurance companies are strictly not allowed to outsource asset management to AMCs. However,if IRDA allows this,Sebi can oversee the investment part and IRDA can continue regulating life insurance products, said an insurer.