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Interest rate hike affects insurance proceeds

(chinadaily.com.cn)
Updated: 2007-06-15 16:40

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The Mayconsumer price indexdata trigger the market's strong expectation of another interest rate hike. Although there is no specific timetable for a rise in the interest rate, once it occurs, the demand for most savings-type insurance products will drop.

"The current ceiling of expected proceeds from savings-type insurance products limited by the insurance regulator is 2.5 percent, while the current after-tax bank interest rate has reached 2.45 percent," said a manager from Haier New York Life Insurance Co."Another interest rate hike will make it higher than the expected proceeds limit of the products."

"Several insurance companies have therefore introduced investment-linked insurance products, but most won't be able to develop similar products in a short time. Their business will be challenged," he continued.

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The full text is available in the June Issue ofChina Insurance.