ET and mint continue to cover the IRDA ULIP victory from unique perspectives, ET inimitably going on cranking it about how SEBI lost a big piece of real estate and the MF industry continues to a mere trickle  of INR 2000 crores or $ 500m in equity schemes in 2009 against INR 50000 or $10bn in 2007. The number of agents has increased exponentially in the meantime with National Institut of Securities Markets taking the mantle from AMFI and running sales and ops certifications across series 4 and series 5 exams. The issue of course is to settle the big discrepancy between mutual funds and units of Variable Life schemes or ULIPs in India in terms of agent commissions, with late entrants in Life treating the INR2 Trillion annual inflow from these quasi mutual fund schemes as the holy grail and sometimes applying commission structures of traditional life products of 15%-40% to daily NAV schemes. mint reports are mean while focussing on proposed IRDA reforms somewhat lost in the now error prone ET.

The commissions on the mutual fund side emanating from entry loads have been elimintaed by SEBI diktats leaving mutual funds to concentrate on debt schemes with corporate buyers and direct sales online or thru banks. MF distributors carry a unique clout still. IRDA mandates the changes in commission for these market returns linked products to half of the current 50-60% cost over first 5 years. in many cases ULIPs at Max New York and others carry only a 10-15% cost over the same 5 years with or without amortization. IRDA will also set mandatory insured amount targets removing the available flexibility for insurers floating 5 times premium and 1.05 times premium as minimum life covers for 10 year and 20 year terms respectively

Having won the Turf wars IRDA has apparently a mandate to regulate the unit linked insurance market for effective control looking for min return guarantees as part of the law in pension products, the bar being somewhere between 4-5% as margin driven insurers are likely to look for loopholes in this uniquely indian system to recover lost profit margins without understanding or responsibly executing the limited freedom granted to them till now much like the Indian credit cards story surviving on retail rates of 40% and more instead of investing in effective underwriting and limit management processes.

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