CHINA – China lifts cap on life insurance interest rates

China’s insurance industry regulator said that it would relax controls on interest rates for standard life insurance products, marking the country’s latest effort to deepen market-oriented reforms in its financial system. 

The 2.5-percent upper limit on pre-determined interest rates of standard life insurance products will be removed starting 5th August, according to a notice posted by China Insurance Regulatory Commission (CIRC) on its website. 

The measure represents China’s freshest effort in interest rate liberalisation, following the central bank’s key move on 19th July to loosen its grip on bank lending rates. 

Under the new regulation, insurance companies can set their own rates in line with prudent principles, but for risk prevention purposes, a new cap of no more than 3.5 percent will be applied for the statutory reserve requirement assessment ratio of standard life insurance products.