Policy Buzz: Insurance cos play safe in ULIP battle

Different strokes

Insurance companies have decided to play safe to avoid any confrontation with market regulator Sebi, which is locked in a turf war against insurance watchdog IRDA.

They have decided not to use terms such as net asset value (NAV) or assets under management (AUM) that equate their unit-linked plans (ULIPs) with mutual fund schemes. NAV refers to the market value of the assets of the scheme minus its liabilities, AUM is the market value of assets that an investment company manages on behalf of investors.

The move by insurers follows a decision by Sebi to ban 14 life insurance companies from raising funds through unit-linked insurance policies (ULIPs) which invest money into equity and debt markets.

The market watchdog’s move was contested by IRDA, leading to a turf war between the regulators. Gener-ally, mutual funds provide daily NAV to its customers to indicate the fund’s performance.

And that’s why ULIP schemes that guarantee the “highest NAVs” had to take a back seat for the moment.

Chinese whispers

The commerce department seems to be unfazed by the reports in the Chinese media on the country’s plans to drag India to the World Trade Organisation (WTO) for not giving clearance to Chinese telecom equipment supplier Huawei.

Responding to questions from the media, commerce and industry minister Anand Sharma said India’s position does not violate any WTO rule.

Commerce secretary Rahul Khullar had a shorter response when journalists told him that a Chinese newspaper had written about the China’s intention to approach WTO. “Let them,” was his cryptic response. It seems it would take much more than media reports to stir the government.

This is not surprising as any person following WTO developments would know that there is more than one slip between the cup and the lip in dispute resolution at the multilateral forum.