Life insurers’ IPO norms: Right step at wrong time

By Siddharth Hariani and Hemant Krishna V, Phoenix Legal

To describe 2011 as a forgettable year for the life insurance segment of the insurance industry would be an understatement.

The run-up to 2010 saw the life insurance segment piggyback successfully on unit-linked insurance plans (ULIPs) so as to achieve a robust growth of 40-50%. In 2010, the Insurance Regulatory and Development Authority (IRDA) tightened the regulatory noose around ULIPs by capping commissions of agents and distributors, enhancing risk cover and extending the lock-in period to five years to give ULIPs the features of a long-term savings product.

Siddharth Hariani Partner Phoenix Legal
Siddharth Hariani
Phoenix Legal

These changes reduced the short-term revenues of distributors, whose bottom line in the segment is commissions. When stubborn inflation conspired with a choppy equity market in 2011, ULIPs lost much of their steam and sheen. Insurance companies had little room to obtain further investment, and were dogged by poor underwriting and a lack of technical expertise.

You must be a subscribersubscribersubscribersubscriber to read this content, please subscribesubscribesubscribesubscribe today.

For group subscribers, please click here to access.
Interested in group subscription? Please contact us.



Siddharth Hariani is a partner at the Mumbai office of Phoenix Legal where Hemant Krishna V is an associate. They can be reached at and


New Delhi

Second Floor,

254, Okhla Industrial Estate,

Phase III, New Delhi-110020


Tel +91 11 4983 0000

Fax: +91 11 4983 0099



First Floor, CS-242,

Mathuradas Mill Compound,

NM Joshi Marg, Lower Parel

Mumbai – 400 013, India

Tel: +91 22 4340 8500

Fax: +91 22 4340 8501