China Life Insurers Expected to Cut Prescribed Interest Rates in 3Q2025
Life insurers in China are expected to lower their prescribed interest rates for life insurance policies in the third quarter of 2025, following a decline in bank interest rates. The prescribed interest rate for standard life insurance plans may be reduced from the current 2.5% to 2.0%. However, adjustments for participating insurance may vary.
This move is a response to the continuing fall in bank interest rates, which has impacted the insurance industry’s investment yields. The reduction in prescribed interest rates is likely to affect the returns on certain life insurance products, particularly universal life policies, nearly 60% of which have seen their credit rates dip below 3% recently.
The change reflects the broader trend in China’s financial sector, where decreasing bank deposit rates are influencing various financial products. Life insurers are adjusting their rates to maintain sustainability and competitiveness in a changing interest rate environment.
The insurance industry in China has been experiencing shifts due to the changing economic conditions. The expected rate cut by life insurers is part of a larger adjustment to the current financial landscape. As bank interest rates continue to fall, insurance companies are reassessing their product offerings to remain viable.
This development comes as the industry faces challenges in maintaining profitability while providing competitive returns to policyholders. The adjustment in prescribed interest rates is a strategic move to balance these competing demands in a low-interest-rate environment.
