Some insurance companies have proactively lowered the guaranteed interest rate of dividend insurance to 1.25%.

Staff Reporter Ling Cuihua

Recently, a certain life insurance company launched a dividend insurance product (hereinafter referred to as “dividend insurance”) with a guaranteed interest rate of 1.25%, which has attracted significant market attention. This is because the design is below the industry standard “top limit.”

According to regulatory requirements, the maximum guaranteed interest rate for dividend insurance is 1.75%, and most mainstream products in the industry are designed at this “top limit.” Industry insiders have learned that several insurance companies currently reserve dividend insurance with a guaranteed interest rate of 1.25%, and more similar products are expected to be launched in the future.

Industry experts believe that insurance companies proactively lowering the guaranteed interest rate of dividend insurance is the result of multiple factors, including the macro interest rate environment, regulatory policies, and industry operating logic.

Dr. Zhu Junsheng, Postdoctoral Fellow and Professor of Applied Economics at Peking University, told Securities Daily that from a macro perspective, China is currently in a period of sustained decline in the long-term interest rate center. The reduction in the guaranteed interest rate of dividend insurance essentially reflects a realignment of the guaranteed return levels of insurance products with the market interest rate environment. From a systemic standpoint, China has established a dynamic adjustment mechanism for the guaranteed interest rates of insurance products, which are no longer solely anchored to administrative upper limits but are gradually forming a system linked to market interest rates.

“From the perspective of industry operating logic, moderately lowering the guaranteed interest rate of dividend insurance helps reduce liability costs, enhances the long-term stability of insurance companies, and is also an important measure to prevent interest margin risk,” Zhu Junsheng said.

Chen Hui, Director of the China Actuarial Science Laboratory at the Central University of Finance and Economics, believes that in recent years, consumers have become more rational in their insurance product choices. Their focus has shifted from guaranteed interest rates to indicators reflecting the long-term investment ability of insurance companies, such as dividend realization rates and historical performance. Meanwhile, lowering the guaranteed interest rate allows insurers to ease rigid cost burdens and leave more room for investment strategies, adopting more flexible investment approaches.

The downward adjustment of the guaranteed interest rate for dividend insurance will have direct impacts on consumers, insurance companies, and the life insurance industry, and will reshape the competitive logic of the industry, accelerating its deep transformation.

Chen Hui states that the decrease in the guaranteed interest rate reduces the current liabilities of insurance companies. Historically, most years have seen investment returns higher than the guaranteed rate, so for consumers, lowering the guaranteed interest rate has a limited impact on their long-term overall returns. In the long run, dividend rates and realization rates will directly affect the difficulty of new policy sales and policyholder surrender rates, which places higher demands on insurers’ investment capabilities.

Long Ge, Deputy Director of the Center for Innovation and Risk Management at the University of International Business and Economics, told Securities Daily that the lowering of the guaranteed interest rate means dividend insurance is shifting from “high guarantees + floating dividends” to “low guarantees + floating dividends.” In the medium to long term, the latter model is expected to become the mainstream form of dividend insurance, with guaranteed interest rates possibly further decreasing in line with market rates. This structural change implies that the contractual guaranteed returns for consumers will decline, and long-term comprehensive returns will rely more on floating dividends. This requires insurers to have stronger long-term investment and active management capabilities, with obtaining stable excess returns becoming key. Additionally, the stability and transparency of historical dividend realization rates will replace the demonstration interest rate as the core competitive advantage and basis for customer trust.

For the life insurance industry, Zhu Junsheng believes that the lowering of the guaranteed interest rate indicates a shift in industry competition logic. Previously, competition among life insurance products heavily depended on interest rate levels, but moving forward, the industry will focus more on comprehensive capabilities, including long-term investment ability, asset allocation, product service quality, brand strength, and sound management. In other words, the industry’s competitive model is gradually shifting from “interest rate-driven” to “asset management capability-driven.”

Overall, industry insiders interviewed believe that insurers lowering the guaranteed interest rate of dividend insurance brings insurance liabilities closer to market interest rates, helping to prevent interest margin risk, and pushing insurance companies to continuously improve their long-term investment and asset management capabilities. From an industry development perspective, this change is not merely a short-term marketing adjustment but a significant signal of the deepening transformation of the life insurance business model.