Insurance industry emerged as the largest investor in the stock market during 2007-08 surpassing the foreign institutional investors, riding on the huge popularity of Unit Linked Insurance Products, according to Life Insurance Council.

The council in a briefing to the media in Mumbai on Thursday said, the net investment by life insurance companies in the equity markets during 2007-08 was Rs 55,000 crore (Rs 550 billion), against an investment of Rs 53,400 crore (Rs 534 billion) by foreign institutional investors.

The investment by mutual funds in the same period was estimated at Rs 16,300 crore (Rs 163 billion).

Referring to the popularity of ULIPs among investors, industry leaders said it is not the insurance industry is promoting ULIPs, but it is the customers who are preferring to invest in ULIPs, which helps them participate in the stock market.

ULIP is a life insurance cover, in which the policy value at any time varies with the value of underlying asset at the time.

S B Mathur, secretary general of Life Insurance Council, an apex organisation of all life insurance companies in the country, said the investment by insurance industry in the stock market in the first four months of this financial year was about Rs 25,000 crore (Rs 250 billion).

During 2006-07, investment by insurance companies in equities was only Rs 20,000 crore (Rs 200 billion).

SBI [Get Quote] Life Insurance Company Managing Director and CEO U S Roy said it was for the first time that the investment by insurance companies in the stock market was higher than the foreign funds.