Market regulator Security and Exchange Board of India (SEBI) has banned 14 insurance companies from selling Unit-Linked Insurance Products (ULIPs).
The companies are Aegon Religare, Aviva, Bajaj Allianz, Bharti AXA, Birla Sun, HDFC Standard, ICICI Prudential, ING Vyasa, Kotak Mahindra, Max New York, Metlife India, Reliance Life Insurance, SBI Life Insurance and TATA AIG.
“The ULIPs launched by the these entities were prima facie found to be akin to the mutual fund schemes and were launched without obtaining registration from the SEBI,” SEBI said in a order posted on its website Friday night.
The ban has come into force with immediate effect. The SEBI had issued showcause notices to all these companies in January.
“I find that the entities by their own admission have stated that there are two components of ULIPs – an insurance component where the risk on the life insurance portion vests with the insurer and the investment component where the risk lies with the investor,” said Prashant Saran, wholetime member of SEBI, in the order.
“This establishes conclusively that ULIPs are a combination product and the investment component need to be registered with and regulated by SEBI,” said Saran.