Life insurers must disclose ULIPs performance, rules SEBI

Life insurance companies planning to raise money from bourses will have to disclose the investment performance of various unit-linked insurance plans (ULIPs) over the past five years to help prospective investors gauge risks better.

These companies will also have to give guidance on earnings from their present business and agreements with foreign promoters, according to new norms cleared by an inter-regulatory panel set up by the Securities and Exchange Board of India(SEBI).

Most of the Insurance Regulatory and Development Authority's (IRDA) suggestions on disclosures have been accepted by the panel, The Economic Times said citing a senior official privy to the development.

ULIPs are similar to equity schemes of mutual funds, but with an insurance cover thrown in. This category accounts for over 80 per cent of the portfolio of private insurers. Insurance watchdog IRDA, which has been granted the right to regulate ULIPs after a public spat with SEBI, has tightened regulations to ward off criticism against miselling of this hybrid product.

Loss-making companies will be allowed to tap the equity market as given the nature of the business, insurers can't wait forever till they make profits, said another person familiar with the developments. ''They should make all disclosures and let investors take the call,'' the person said.

The norms approved by the SEBI panel also mandate an insurer to provide information on the capital structure over the past five years. This will give investors an idea on the capital infusion by foreign promoters in joint ventures in India. At present, foreign promoters are allowed to hold a 26 per cent stake in an insurance joint venture.