Insurance Premiums Face Upward Pressure as Disclosed Rate Hits 4-Year Low
Even as market interest rates continue to rise, an insurance industry benchmark used in insurers’ pricing decisions for next year is moving in the opposite direction, putting upward pressure on premiums. The Financial Supervisory Service has confirmed that the average disclosed interest rate to be a
The insurance industry is bracing for upward pressure on premiums as the benchmark interest rate used in pricing decisions has hit a four-year low. The Financial Supervisory Service reported that the average disclosed interest rate for next year will be 2.25%, down from 2.50% this year, marking the lowest level since 2023 and matching the rate from 2021.
This decline in the assumed interest rate, which insurers use to estimate the return on premiums collected, could lead to a 5% to 10% increase in premiums as insurers seek to maintain sufficient funds for promised benefit payments. Major life insurers like Samsung Life and Hanwha Life have already reduced their disclosed interest rates despite rising market rates, but insurers are considering offsetting the higher premiums by offering reduced coverage or lower benefit limits to maintain price competitiveness.
Brief written by urgent.news from BusinessKorea's own syndicated text. Machine-written — may contain errors; check the original before relying on it.
