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May 8, 2001
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Money > Business Headlines > Report May 8, 2001 |
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Insurers put unit-linked plans on backburnerFreny Patel An uncertain capital market has forced the new life insurance players to shelve the plans for launching unit-linked products. ICICI Prudential Life and HDFC-Standard Life Insurance have indefinitely put off their plans to launch the capital market-linked insurance covers. OM Kotak Mahindra Life Insurance Company, which will shortly enter the market with endowment and money-back covers, has also put on hold its simultaneous launch of unit-linked risk products. Unit-linked is an insurance product, characterised by an unbundling of the risk and savings elements, whereby the premium paid is represented by certain units, and the return is based on the net asset value. In traditional insurance products, the return is not known by the policy holder. Life Insurance Corporation of India chairman G N Bajpai also admitted that the performance of the corporation's unit-linked plan -- Bima Plus -- had taken a beating and had failed to meet expectations since its launch in February this year. "This is linked to market sentiment," said Bajpai. Since March 1, the Bombay Stock Exchange Sensex has lost 726.84 points and the bourse has seen shaving off its market cap by Rs 1,371.58 billion. "Mutual funds are going through a bad time and as such there does not seem to be an immediate need for unit-linked risk products," said an official of HDFC-Standard Life. The firm has introduced various savings and protection covers. It proposes to introduce a single premium bond shortly, and will also come out with a pension scheme in the next couple of months. ICICI-Prudential Life's chief executive officer and managing director Shikha Sharma said: "Given the state of the capital market, there is no need for such risk products at this juncture." The company has introduced an array of insurance covers, except the unit-linked products. In developed economies such as the UK, the US and Australia, the demand for the unit-linked products is higher than that of the conventional products. Back in 1987 when the UK markets crashed, there was a sharp decline in unit-linked products. Demand for such covers, however, revived in 1993 as the share of this business shot up to 64 per cent of the total new business premium. Powered by YOU MAY ALSO WANT TO READ:
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