Life insurance players on Monday heaved a sigh of relief following a truce effected by the finance ministry between the two regulators – Sebi and IRDA – on the ULIPs issue.

Both the capital market regulator (Sebi) and the insurance sector regulator (IRDA) will now jointly seek a binding legal mandate from an appropriate Court, according to an announcement made by the finance minister Pranab Mukherjee.

Welcoming the development, Life Insurance Council's Secretary-General, S B Mathur, said "it is a transparent method of resolving the imbroglio and removing the ambiguities that have arisen. It will also create a road-map to resolve issues involving multiple regulators in the future as well."

Several life insurers also welcomed the move.

"We welcome this step as it will create confidence among the consumers," a Max New York Life spokesperson said.

Bajaj Allianz Life's Chief Operating Officer, V Philip, said, "we welcome the initiative as it clarifies the concerns of our customers. Anxiety on the part of our customers could have caused delay in payment of renewal premiums."

According to a law firm official, SEBI will now have to come out with a fresh order suspending the ban which was imposed on the 14 life insurance companies.

"The SEBI order (of April 9) will now have to be withdrawn and it will have to issue a fresh one suspending the earlier order. It is an immediate relief to life insurance companies," Nishith Desai's Principal, Siddharth Shah, said.

Sebi and IRDA can now approach either the Delhi, Mumbai or Hyderabad High Court on the matter, he added.

The tussle between the two regulators has been going on for a few months now with Sebi contending that ULIPs fall under its jurisdiction since a part of the premiums involved are invested in equities and debt.

It, therefore, wanted life insurers dealing in ULIPs to obtain its approval before launching these products. Since none of these companies had done so, Sebi banned 14 life insurers from selling ULIPs on April 9.

IRDA, on the other hand, argued that since it was the insurance sector regulator, insurance companies fall only under its purview.