CHINA'S STATE COUNCIL APPROVES REMOVAL OF CAP ON LIFE POLICY INTEREST RATES

Insurers in China are likely to offer higher rates of return if the cap on interest rates on life products is removed, but such a liberalization could put some life assurers' capital and solvency levels under pressure. 21st Century Business Herald claimed that the State Council had approved the liberalization and that details would be announced shortly by the China Insurance Regulatory Commission (CIRC). Earlier this month the People's Bank of China announced a similar liberalization of bank lending rates. Currently a 2.5% cap is in place, but this is not particularly competitive, leading analysts to conclude that rates would exceed this if the cap was removed.