Mumbai: Mutual Funds will have to get a licence from the Insurance Regulatory and Development Authority to sell unit- linked insurance plans and comply with solvency requirements, said IRDA. The comment from insurance regulator comes in the wake of the mutual fund industry's demand to sell equity products bunched with insurance. Mutual Funds are welcome to sell unit linked insurance products (ULIPs) after guarantee full compliance to the regulation of the Insurance Regulatory Development Authority. Mutual funds will need to obtain a licence and meet the solvency requirements of the IRDA.
At present, the capital requirement norms for insurance companies are much higher than those needed by a mutual fund. Also, insurance companies are regulated by IRDA whereas mutual funds are regulated by SEBI. Insurance companies have been firmly against mutual funds selling such bundled insurance products. The Life Insurance Council, the self-regulatory body representing insurance companies, has been in dialogue with the IRDA about the issue. Insurers say that they have to comply with several guidelines such as rural and social sector requirements, which mutual funds don't have to. Besides, ULIPs can be sold only by licensed intermediaries like insurance agents who have to undergo 50 hours of training.
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