Personal insurance pricing anchor stabilizes: Benchmark interest rate research value continues to rise to 1.94%

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On July 21, the Insurance Association announced that the research value of the scheduled interest rate for ordinary life insurance products in the second quarter was 1.94%, up 1 basis point from 1.93% in the first quarter.

Since the implementation of the dynamic adjustment mechanism, the research values of the scheduled interest rate for ordinary life insurance products have been 2.34%, 2.13%, 1.99%, 1.90%, 1.89%, 1.93%, and 1.94% respectively.

After four consecutive quarters of decline, the research value rebounded by 4 basis points in the first quarter of this year and continued to edge higher in the second quarter.

The current research value is just 6 basis points below the 2.0% upper limit for ordinary products' scheduled interest rates.

According to the dynamic adjustment mechanism effective in January 2025, a downward adjustment will only be triggered if the research value stays more than 25 basis points below the upper limit for two consecutive quarters. This threshold is currently far from being reached, making it likely that the upper limit for various products in 2026 will remain unchanged.

Over the past three years, scheduled interest rates for life insurance products have undergone multiple downward adjustments:

Among them, the maximum scheduled interest rate for ordinary products has fallen from 3.5% to 2.0%, a total decrease of 150 basis points. Starting from September 2025, the maximum scheduled interest rate for participating products will be reduced to 1.75%, and the highest minimum guaranteed rate for universal products will be reduced to 1.0%.

Consecutive rate cuts have pushed insurance companies to lower the rigid liability cost of new business, leading to multiple rounds of product transitions and phases of "sales peaks" before product discontinuation.

The stabilization of the research value indicates that this round of "rapid decline period" is approaching its end.

However, this does not mean that the scheduled interest rate has entered an upward channel, nor can it be concluded that the low interest rate cycle has ended. The research value incorporates various market rates and their moving averages, and may still fluctuate according to changes in long-term rates and the industry's asset-liability status.

While the pricing upper limit is stabilizing, the structure of life insurance products is rapidly tilting toward participating insurance.

According to disclosures by listed insurance companies for 2025, the proportion of participating insurance premiums in China Life’s individual insurance channel has reached nearly 60% of first-year regular premiums; over half of China Pacific Insurance’s new regular premium business comes from participating insurance, with 61.4% in the agent channel; New China Life saw its participating insurance proportion rise to 77.0% in the fourth quarter of 2025.

Compared to ordinary products, the maximum scheduled interest rate for participating products is currently 25 basis points lower, which reduces the guarantee cost for insurance companies while allowing clients more flexibility through non-guaranteed floating dividends.

However, for insurance companies, participating insurance does not simply reduce liability costs. The realization rate of product dividends depends on the performance of the participating account, and the increasing proportion of participating insurance places higher demands on long-term investment capability, account management, asset-liability matching, and sales suitability.

The team of Liu Xinqi from Guotai Haitong Securities believes that, over the past three years, the continued decline in the maximum scheduled interest rate for ordinary life insurance products, together with the shift to floating income products, is likely to gradually reduce the cost of rigid liability on new policies, which in turn should drive improvement in the cost of outstanding liabilities.

However, digesting existing high-cost policies will take a long time, and the industry’s interest spread pressure will not be alleviated immediately by the short-term stabilization of the research value.

Overall, the research value for scheduled interest rates has rebounded for two consecutive quarters, providing a relatively stable window for pricing life insurance products. The industry's focus is expected to shift from frequent product switching to optimizing business structure and asset-liability management.

Going forward, close attention should be paid to trends in long-term interest rates, investment returns on insurance funds, dividend realization rates, and changes in effective insurance demand among residents.

Risk Warning and DisclaimerThe market has risks, investment should be cautious. This article does not constitute personal investment advice, nor does it take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Investments made based on this article are at your own risk. ```