After 2 decades of launching ULIP suddenly the  Insurance Regulator has woken up to need for Certification for people selling ULIP products. Better late than never.

In 2004 I did 20 rounds of training for one life insurance company – the then MD thought it was necessary. However, not every life insurance company thought that way.  Not every bank thinks that way. Mis-selling by mutual funds, life insurance companies, and banks is the norm. Will a new certification help? I have my doubts.

IRDAI has said that insurance agents will have to attend an additional training session apart from the other mandatory trainings to become eligible to sell ULIPs. This training would cover topics like development of capital markets, basic knowledge and concept of ULIPs, suitable market segments and so on. Unlike SEBI the Insurance Regulator has not insisted on passing some exam. The exam passing itself is a joke – but just asking people to attend some more training is worse than a joke. NISM is perfectly capable of creating a syllabus and giving a certificate to people who have to sell ULIP. Oops Inter-Regulator ego may not allow this to happen I guess.

IRDA also thinks that it can legislate, and things will happen. For example they say that the agents selling ULIPs will also need to ensure that their clients understand risks related to ULIPs. Agents will be required to disclose development in other market-linked products like mutual funds. This is like saying that a server working in a McDonalds should tell their clients “Idli available at the nearby hotel is better for your health than the Burger that we serve”. Neither the agent, nor the manufacturer, nor the client will be keen to do this. I have no clue when will the regulator stop seeing things with a telescope of good intentions. Most of them have no clue what is happening on the ground.

In fact, insurance agents will now have to ensure that they sell policies based on product suitability parameters such as risk appetite and financial goals of their clients. Such a suitability will have to be ascertained through a series of questions such as age, income, family status, life stage, financial and family goals, investment objectives, insurance portfolio already held and so on. This of course is the icing on the cake. Will never happen.

Now to prove to the Regulator that all this is being achieved LI companies will have to generate documents (or electronic proof). This “need analysis”  training is going to be a massive training opportunity for the tons of trainers wondering what to do with their time. Of course I am a trainer too ….but this is not an invitation …..LOL.

I spoke to 3 biggies in the industry. 2 of them had not heard about it. One thought it was going to be implemented only for bancassurance. I thought it is applicable to everybody. Sure I could be wrong.