Insurance Companies Adjust as Market Interest Rates Rise
Increase of 0.05~0.07%P
[Asia Economy Reporter Oh Hyung-gil] As insurance companies raise the announced interest rates for pensions and savings insurance, it is expected that policyholders' refund amounts will increase. Following two base rate hikes last year, the possibility of further increases this year is growing, so the announced interest rates are also expected to rise for the time being.
According to the insurance industry on the 6th, major life insurance companies have been consecutively raising announced interest rates this year as well as last year.
Samsung Life Insurance raised the announced interest rate for pension insurance by 0.06 percentage points from 2.30% last month to 2.36%. After lowering it to 2.24% in March last year, it raised the rate by 0.03% in July and October respectively. For savings insurance, it increased the rate by 0.06 percentage points from 2.25%, which had been steadily maintained since March last year, to 2.31% this month.
Hanwha Life Insurance also raised the announced interest rate for pension insurance by 0.06 percentage points from 2.31% last month to 2.37% this month, and for savings insurance from 2.22% to 2.28%. Kyobo Life Insurance recorded an announced interest rate of 2.35% for pension insurance, up 0.05 percentage points from the previous month, and 2.45% for savings insurance, up 0.20 percentage points.
During the same period, NH Nonghyup Life Insurance raised the announced interest rate for savings insurance by 0.05 percentage points from 2.22% to 2.27%, and Tongyang Life Insurance applied a 3.03% rate, raising the announced interest rates for pension insurance, savings insurance, and even protection insurance by 0.07 percentage points each.
In addition, ABL Life, Heungkuk Life, and MetLife Life have adjusted announced interest rates upward mainly for savings-type insurance. On the other hand, Shinhan Life, Prudential Life, DGB Life, and DB Life have maintained the announced interest rates at the same level as the previous month.
Some insurers raised announced interest rates last month as well. KB Life raised the interest rates for savings insurance and general pension insurance by 0.1 percentage points each, and KDB Life raised the announced interest rate for pension insurance by 0.02 percentage points. Among non-life insurers, Samsung Fire & Marine Insurance raised the interest rates for pension insurance and savings insurance by 0.05 percentage points each last month.
The announced interest rate refers to the interest rate applied to the portion of the insurance premium paid by policyholders of interest rate-linked products that is accumulated after deducting business and operating expenses. It is announced monthly by insurance companies considering the announced standard interest rate published by the Korea Insurance Development Institute.
The announced standard interest rate is a weighted average of regular deposit rates, corporate bond yields, and policy loan rates. The announced standard interest rate in January this year was 2.3%, up 0.1 percentage points from 2.2% in the previous month. This is the highest level since March 2020.
It plays a role similar to bank deposit interest rates, and from the policyholders' perspective, when the announced interest rate rises, the maturity refund amount increases accordingly. Insurance companies have been lowering the announced interest rate as liabilities increase and asset yield rates fall under the low-interest rate environment.
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