The benchmark for pricing life insurance products has increased once more. On July 21st, the Insurance Association of China announced that the current reference value for the assumed interest rate of standard life insurance products is 1.94%, up 1 basis point from 1.93% in the first quarter. Since this reference value is directly linked to adjustments in life insurance product pricing, its consecutive increases indicate that passive price adjustments for these products are unlikely in the near term. Industry forecasts suggest that, against the backdrop of stabilizing long-term interest rates, the current interest rate ceilings for various insurance products are expected to remain steady.
Market dynamics are often interconnected. The clear signal of "no rate cuts" in insurance means consumers need not worry about premium increases or yield reductions for insurance products in the short term. For insurance companies, however, this signifies a period of pricing stability is approaching, and the "sales rush" booms triggered by product withdrawals may be difficult to replicate.
Reference Value Increases Again
On July 21st, the Insurance Association of China announced the current reference value for the assumed interest rate of standard life insurance products is 1.94%.
According to a notice issued by the National Financial Regulatory Administration in 2025 regarding the linkage and dynamic adjustment mechanism between assumed interest rates and market rates, when the maximum assumed interest rate for standard life insurance products on sale exceeds the reference value by 25 basis points or more for two consecutive quarters, insurers must promptly lower the maximum assumed interest rate for new products and smoothly transition between old and new products within two months.
Since the initial disclosure of the reference value in January 2025, the Insurance Association has published this figure seven times for standard life insurance products: 2.34%, 2.13%, 1.99%, 1.9%, 1.89%, 1.93%, and 1.94%. It is evident that after four consecutive decreases, the latest two values have risen sequentially, increasing by 4 basis points and then 1 basis point from their respective previous figures.
The current maximum assumed interest rate for standard life insurance products in the market is 2%. The gap between this rate and the current reference value is only 6 basis points, which does not reach the adjustment threshold.
Given that the trigger level for an assumed interest rate reduction corresponds to 1.75%, industry consensus is that the pressure for another rate cut in the short term has diminished significantly. Wu Zewei, a special researcher at Jiangsu Bank, noted that the slight increase in the reference value is a positive signal following a period of stabilization, reflecting a marginal improvement in the long-term market interest rate environment and some recovery in the underlying pricing support for the industry. The current spread between the reference value and the product interest rate ceiling has not met the trigger conditions of the dynamic adjustment mechanism, failing to satisfy the regulatory requirements for an assumed interest rate reduction. Considering the trend of two consecutive quarters of recovery, the probability of a rate cut within the year has decreased notably.
Regarding the future direction of the reference value, a research report from Zhongtai Securities calculated that if subsequent treasury bond yield curves, five-year fixed deposit rates, and five-year LPRs maintain their current levels, the simulated reference value by the end of 2026 would be 1.86%. From a medium-term perspective, the likelihood of an adjustment to the upper limit for new product assumed interest rates is not high.
Short-Term "Sales Rush" May Be Hard to Repeat
Over the past three years, the assumed interest rates for life insurance products have undergone multiple rounds of reductions. The maximum rate for standard products fell from 3.5% to 2%, a cumulative drop of 150 basis points. The maximum assumed rate for participating products was lowered to 1.75%, and the maximum guaranteed interest rate for universal life products was reduced to 1%.
Regulatory efforts to push insurers to lower assumed interest rates aim to reduce rigid liability costs. However, this action has also led to multiple product transitions and periodic sales peaks driven by "sales rush" campaigns. The industry widely predicts that the possibility of adjusting the assumed interest rate ceiling this year is low, which also means the "sales rush"红利期 (红利期 translates to "boom period" or "windfall period") driven by rate cuts is unlikely to reappear.
Historically, catalyzed by "sales rush" activities, the life insurance industry often saw high monthly premium growth. As this short-term driver fades, the industry will face the challenge of shifting its growth momentum. Li Wenzhong, Deputy Director of the Rural Insurance Research Institute at Capital University of Economics and Business, analyzed that the quarterly premium surges often seen before past rate cuts will not recur, at least not within this year. Premium growth in the third and fourth quarters of this year will return to normal, which will create some pressure for insurance companies in achieving their annual premium targets.
The changing market environment also affects frontline insurance sales personnel. Li Wenzhong stated that many agents and brokerage firms previously relied heavily on "withdrawal expectations" for their marketing rhythm, with "buy now before this yield is gone" being one of the most powerful sales pitches. With the short-term opportunity for "sales rush" gone, some agents with weaker sales capabilities who over-relied on withdrawal-related pitches will find sales more challenging. In the medium to long term, the sales logic will undergo a fundamental shift, moving from "sales rush" to "demand-driven." This places higher demands on the professional competence of sales teams, requiring a genuine understanding of product terms, dividend mechanisms, and coverage scope, rather than merely reciting withdrawal scripts.
Life Insurance Reconstructs Growth Logic
As the pricing environment for life insurance products enters a stable phase, the industry's operational focus is expected to shift further from frequent product switching towards optimizing business structure and asset-liability management.
Li Wenzhong indicated that over the past year or so, the core logic of the industry's product strategy has been "rushing ahead before rate cuts" and "rapid switching," consuming significant product development resources to keep pace with regulatory changes. Now, with a stable window, insurers can redirect their efforts towards more valuable innovative directions. With interest rates expected to remain at relatively low levels, participating and universal life products can enhance their appeal. Simultaneously, insurers can compensate for the shortfall in guaranteed returns by adding service value, further optimizing development models such as "insurance + elderly care communities" and "insurance + health management."
Strategic changes on the product front will also transmit to the sales side. Wu Zewei noted that the sales side will move away from short-term, pulse-style marketing tactics. Sales personnel will shift towards long-term service and promoting product value, leading to a more standardized and healthier industry sales ecosystem. The phenomenon of irrational, concentrated premium surges will gradually subside, with premium income rhythms becoming more stable and balanced. The industry is transitioning from relying on policy红利 (红利 translates to "dividends" or "benefits") to drive growth towards achieving steady, normalized growth based on product strength and service capabilities.
Looking at a longer cycle, the dynamic adjustment mechanism established by regulators is reshaping the industry's development logic. Zhang Xinyuan, Research Head at Kefangde Think Tank, pointed out that in the long run, this mechanism will guide the life insurance industry from a "fixed assumed interest rate" model towards more flexible, market-driven pricing. This will compel insurers to enhance their investment capabilities and risk management levels, reducing interest spread loss risks. The most significant change is that while fixed rates in the past easily led to the industry "profiting effortlessly" or "incurring losses," insurers now need to proactively adapt to market interest rate fluctuations, driving product structure optimization and operational refinement.
From Li Wenzhong's perspective, this places higher demands on the counter-cyclical management capabilities of the life insurance industry. Dynamic adjustment means assumed interest rates will fluctuate alongside market rates, gradually transforming life insurers' liability costs from "rigid" to "semi-elastic." This requires the industry to possess stronger counter-cyclical management awareness. During interest rate downturns, it must proactively reduce liability costs and control the pace of scale expansion. During interest rate recovery periods, it can appropriately increase the supply of long-term products.