Ban on actuarial products stayed

In a new twist to the Insurance Regulatory & Development Authority (Irda) ban on actuarial-funded products, the Madras High Court has ordered a stay on the move.

Justice V Dhanapalan of the Madras High Court has admitted a plea filed by two Bajaj Allianz Life Insurance agents against the ban and has stayed the existing order by Irda and Bajaj Allianz Life Insurance (which asked its branch offices not to sell such products) for eight weeks. The court issued the order on September 13.

Justice Dhanapalan has issued notices to the ministry of finance, Irda and Bajaj Allianz Life Insurance to provide details of the product to continue court proceedings on the matter. Caught in a bind, Bajaj Allianz Life Insurance has sought Irda?s clarification on the issue before resuming sales of the product.

Irda officials could not be reached for comment.

Irda, in a sweeping order in August, had asked two life insurance companies, Bajaj Allianz Life Insurance and Aviva Life Insurance, to withdraw actuarial-funded products. For such products, which are a part of unit-linked insurance plans (Ulips), the charges are calculated in a different manner. In normal Ulips, the charges are up-front, while in actuarial-funded products, they are amortised over a period of time.

While Bajaj Allianz Life Insurance was asked to phase out the product by August 31, Aviva Life is still negotiating with the insurance regulator to fix a date for the withdrawal of the product.

In a press release issued on August 18, Irda member R Kanan had said that all actuarial-funded products would be phased out over a period of time and all categories of Ulips of the domestic life insurance industry would have to be standardised.

?Irda is keen to ensure that all Ulips are transparent and that customers from every walk of life can compare features and charges across products and across companies,?? said Kanan.

Kanan had, however, clarified that there was nothing technically wrong with actuarial-funded products and that all existing customers would be protected by the concerned companies and Irda.