It is now well known and accepted that Ulips, or unit linked insurance plans, were a scam which defrauded the investors off huge sums.
Mint newspaper has, through a painstaking research, arrived at an estimate of this loss and it is a mind numbing Rs 1.56 lakh crore.
According to the report, the losses the retail investors suffered in the Ulips are one of the reasons for their lack of confidence in the market and their flight for real assets like gold.
"The mis-selling of life insurance products in the decade after the 2000 privatization is a textbook case of poor regulation and mis-managing the transition from a state monopoly to free markets," the report said.
Insurance companies and agents were complicit in the mis-selling of Ulips to the common man, including the financially illiterate people and the sophisticated urban rich.
The companies gained enormously, as they levied high surrender charges on investors most of whom lapsed the policies finding them financially unviable to them.
Agents mis-sold the products, eyeing high first-year commission - in certain cases as high as more than 40 percent. They lied to investors that the tenure was just three years, while it was actually a long-term product.
Agency commissions during 2004-12 totalled Rs 1.13 lakh crore. In other words, as much as 71 percent of the estimated losses of the investors was paid off to agents as commissions, it said.
The laxity on the part of authorities is so much that there is no way to ascertain how much investors might have lost due to the mis-sales.
"Neither the regulator-the Insurance Regulatory and Development Authority (Irda)-nor the industry association-the Life Insurance Council-reports this number," the report says.
So, the losses can only be estimated. The methodology adopted by the authors has taken only the minimum losses that investors could have incurred. The actual losses will be much higher, the report says.
As a cross section of the insurance industry disagrees with the study and refuses to take any responsibility, investors are left in the lurch, with no agency to help them make good for the huge losses they suffered.