Life insurers oppose MF houses selling insuranceLife insurance companies are facing major concerns on sale of insurance cover by mutual funds industry as this could hamper their distribution network.
25 Aug 2008
Life insurance companies are facing major concerns on sale of insurance cover by mutual funds industry as this could hamper their distribution network. They have also raised a complaint to the regulating authority that such a move would end up violating the guidelines.
As per reported by The Economic Times Life insurance Council chief executive SB Mathur said, "insurance companies are spending hundreds of crores on training agents to sell insurance. If mutual fund distributors are allowed to sell insurance without adequate training, the sanctity of the training would be lost."
If mutual funds were given too much flexibility in the level of insurance cover, it could weaken the quality of underwriting and safeguards followed by life insurance companies, Mr Mathur added.
There is an ongoing war between the two industries on this issue. Mutual funds houses (MFH) are attacking insurers over lack of transparency and high charges which is associated with unit-linked insurance plan and on the other hand insurers are responding to it by saying that the MFH are only exploiting the failure of the mutual fund industry to build a distribution force for retail selling.
MFH have submitted a proposal in which they will sell insurance cover against which premium will be collected.
Insurer also pointed out that as per IRDA guidelines any buyer of insurance know from which company he is buying the insurance policy. As in the past as per the regulating guidelines it was banned to name the product manner that it is identified predominantly with the distributor.