With the Insurance Regulatory Development Authority (Irda) having given jurisdiction over Ulips (unit-linked insurance plans), it could be business as usual once again for India?s life insurers. Already big investors in the country?s stock markets, life insurance companies could, in the next few years, emerge as a strong counterbalance to foreign institutional investors (FIIs) who have for a long period of time held sway over the stock markets. Life Insurance Corporation (LIC) will clearly lead the way.

In 2009-10, LIC invested a gross Rs 61,000 crore in the Indian stock markets. The net amount invested is estimated at around Rs 45,000 crore. In other words, roughly a fourth of the life insurance firms? total premium collection of approximately Rs 1.8 lakh crore was invested in equities.

Meanwhile, 21 private sector life insurers together are estimated to have collected around Rs 0.8 lakh crore as premium income last year. Given that a fair amount would have flowed into Ulips, at least around Rs 20,000 crore would have found its way into the stock markets, say analysts.

In other words, insurance companies together shopped for equities to the tune of around Rs 65,000 crore last year. In contrast, FIIs bought stocks worth approximately Rs 1.2 lakh crore or twice the amount.

This year too, life insurers are likely to emerge as big investors in the stock markets. With the impasse over Ulips having been resolved, collections from those policies are likely to pick up. In the current year, LIC is targeting premium collections of over Rs 2 lakh crore and, according to a senior official, investments in stocks could be around a third of that amount.

In the first two months of the current fiscal, about Rs 8,400 crore has been invested in equities, a seven-fold increase compared with the corresponding period of the previous year. N Mohan Raj, executive director in charge of investments at LIC, said he was not too worried about short-term volatility. ?Valuations have cooled down a bit and every dip is an opportunity to buy.?

FIIs too have been shopping for Indian equities and have picked up stocks worth Rs 4,032 crore from April 2010.