Currently insurers are promoting traditional plans as regulatory changes have forced the insurers to cut down ULIP sale.
One of the major demands of the insurance companies in the recent meeting with the FM was measures to improve commissions for unit-linked insurance policies (ULIP), which have seen their share in premium fall to 15 per cent last year from a high of around 70 per cent in 2008-09 due to regulatory changes.
The industry expects some positive signal on this agenda in the second FM meeting. Most of the insurance companies claim that with strict regulations on ULIPs in place now, mis-selling will be curbed. Hence, there is a need to relook at commissions, say insurance firms.
If the commissions were to be hiked, experts from the industry feel that ULIPs could again be the flagship products. “In India it is very difficult to convince consumers to buy a pure traditional/term policy because they do not understand its importance,” said a senior official from a top insurance company.
According to insurers, they have been struggling to sell traditional products over a year. Moreover, the frequent regulatory changes are acting as a hindrance. At this point, insurance industry needs the ULIP product, feels the CEO of a private insurance company.