It is important to know the views and tone of ICICI in the ULIP Ban Case. Here is their view presented by their subsidiary company ICICI Securities,
As regards the ongoing conflict between the IRDA and SEBI about jurisdiction over ULIPs, we believe ‘status quo’ will be difficult to maintain in light of the Finance Minister’s comment on phasing-out the current ‘front load’ structure in the life insurance space. Such a structure, if implemented, will be significantly negative for the industry.
The implementation would lead to sharp decline in sales & persistency in the short term, pressurise margins and have negative impact on valuations.Current high commission structure seems to be the bone of contention - The life insurance industry sports a high commission structure, wherein the agent is paid a huge incentive on fresh sales.
A ‘no front-load’ policy can lead to sharp decline in new business sales in the absence of strong incentives to agents to ‘push’ products. Sales agents may mull alternate career options as high commissions on new business give way to low trail commissions. [
That means mis-selling will come to an end in the Industry]
In a move To suggest an integrated approach to financial education that aims at increasing the financial literacy quotient of the Indian consumer of financial products and services
Swarup Committee No Entry Load by 2011.
ULIP / Insurers are afraid that there will be Significant impact on sales growth going forward, Large distribution platforms [
We call it a Day Loot mafia of innocent Indian Citizen in the name of ULIP] created may become difficult to support. Finally, Potential impact on valuations and capital commitment at the margin.
