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China: Life insurance pricing fully liberalised

Source: Asia Insurance Review | Nov 2015

China’s insurance regulator has fully liberalised the pricing mechanism for life insurance products with effect from 1 October, aiming to encourage more market-driven competition among insurers.
 
   The new policy allows insurers to set up their own interest rate for dividend-paying life insurance products that previously was capped by the regulator at around 2.5%, reported the China Daily.
 
   This latest move marks the completion of the pricing reform of the country’s life insurance products. The regulator has already liberalised interest rates for term and universal life insurance products.
 
   Mr Wang Zhichao, Deputy Director of the Life Insurance Department at the China Insurance Regulatory Commission (CIRC), said that the latest interest rate reform will likely reduce premiums for dividend-paying life insurance by more than 15% and will substantially boost the attraction of such products for customers. “The goal is to give the pricing power back to the companies, to encourage more competition and to form a market-driven pricing system,” he said.
 
   Products that offer interest rates higher than 3.5% will remain subject to regulatory approval, according to the CIRC.
 
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