ULIPS - More pro to insured and less to insurance company

Late on Tuesday,the regulator unveiled new regulations on unit-linked insurance plans,capping the surrender charge on policies that are returned after a year at 15%.This is a huge benefit for the customer as today there are several plans where the customer gets nothing if s/he surrenders her/his long-term policy after paying the first year premium.
example.If the policyholder paid Rs 100 in the first year,a big chunk of around 40% is deducted by way of various charges.The remaining 60% is allocated to the Ulip fund.If for any reason the policyholder fails to pay the renewal premium,the insured would get back 85% of Rs 60 thereafter,i.e., Rs 51 after the lock-in period.The maximum surrender charges,which is 15% for first year surrenders,reduces year after year and comes down to 5% for the fourth year and 2.5% for the fifth year.
Henceforth,insurers can hope for a profit only if most policies are renewed.Under the new norms,insurers have to refund the amount under a lapsed policy through a cheque or demand draft to the last known address.Although these regulations benefit policyholders,they will hit the bottomlines of life insurers