Savings and Pension Insurance Refunds Increase... Public Interest Rates Stir (Comprehensive)

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 additional increases this year is also growing, so the announced interest rates are 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 rates by 0.06 percentage points each: pension insurance from 2.31% last month to 2.37% this month, and 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.

The Impact of Market Interest Rate Increases Expected to Continue into the New Year

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 an increase of 0.09 percentage points to 2.26% for savings insurance.

In addition, ABL Life, Heungkuk Life, and MetLife Life Insurance have adjusted announced interest rates upward, mainly for savings 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 also raised announced interest rates last month. KB Life Insurance increased the interest rates for savings insurance and general pension insurance by 0.1 percentage points each, and KDB Life Insurance 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 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 premiums paid by policyholders of interest rate-linked products that are 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 fixed deposit rates, corporate bond yields, and policy loan interest rates. The announced standard interest rate for 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 functions similarly to bank deposit interest rates, and from the policyholder's perspective, when the announced interest rate rises, the maturity refund amount increases accordingly. Insurance companies have been lowering the announced interest rate as asset yields fell under the low-interest rate environment, increasing liabilities.

An industry official said, "As market interest rates steadily rise, the announced interest rates are also trending upward," adding, "With expected base rate hikes and market interest rate fluctuations in the new year, the announced interest rates may also move accordingly."

This content was produced with the assistance of AI translation services.