Regulators Ease Up on Insurance Industry

From Caijing Magazine:

After being required to pay a fixed 2.5 percent interest rate on life premiums for nearly a decade, China’s insurers are preparing for regulatory reforms that allow adjustable rates and could lead to more market-oriented flexibility.

The first step toward reforming the state-controlled industry came when the Chinese Regulatory Commission (CIRC) recently launched a pilot project that lets insurers in Tianjin independently set interest rates for customers with life policies.

CIRC issued guidelines June 20 for the pilot project in the city’s Binghai District, an area used for innovative financial projects. The guidelines said rates for complementary life products could be set according to “prudential consideration,” and that insurers would no longer be bound by a 1999 rule requiring a 2.5 percent annual interest rate for life premiums.

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