The effects of prolonged low interest rates on life insurers represent a complex but manageable headwind for the industry as it continues to adapt its business model in response, according to a new research report published today by The Geneva Association, the leading international think tank of the insurance industry.
Life insurers assume risks that are more effectively borne by institutions than by individuals. Longevity and mortality risks provide diversification benefits when grouped together and they are much more predictable when pooled by insurers across large numbers. As institutional investors, life insurers play a key role in funding the real economy and the public sector. And like any other business, life insurance provides jobs for employees.
The role of life insurance in helping individuals achieve peace of mind and financial security is significant. In a low interest rate environment, insurers have an even bigger role to play as individuals may struggle to find investments with appropriate returns. Life insurance can provide investment performance in combination with a secure insurance guarantee and a death benefit for beneficiaries. However, the industry is not immune to low interest rates.
The new report from The Geneva Association analyses the impact that low interest rates have on life insurers and their customers, and how the life insurance industry is adapting to this challenging macro-financial environment.
Read the full report: The 'Low for Long' Challenge: Socio-economic implications and the life insurance industry's response
Daniel Hofmann, Senior Advisor on Insurance Economics at The Geneva Association and principal author of the paper, "The 'Low for Long" Challenge,” discusses the societal impact of low interest rates, and the obstacles this raises for the life insurance industry.
Read the full report: The 'Low for Long' Challenge: Socio-economic implications and the life insurance industry's response
Could prolonged low interest rates jeopardise the unique socio-economic role of the life insurance industry in delivering retirement solutions and funding the economy? Our report explores how life insurers are responding to this challenge.
Issue Brief 1: How the life insurance industry is tackling a 'manageable headwind'
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