National Bank to limit life insurance rates to 1.50%

National Bank to limit life insurance rates to 1.50%

BNB (National Bank of Belgium) is suggesting implementing a maximum rate of return for long-term life insurance of 1.50%, against the current 3.75%, reveal dailies De Tijd and L’Echo on Friday. Jan Smets, Governor of BNB, is recommending a decrease in the maximum rate for life insurances lasting more than eight years, from 3.75% currently to 1.50%. Low long-term rates are an issue for insurers offering guaranteed-yield life insurance. “They run the risk of having to commit to higher yields than what they can achieve from their assets, for ten and up to twenty years,” highlights Jan Smets. Insurance companies will also have to comply with new rules for assets valuation from next year. The new regulation will affect their solvency ratio, according to BNB.

Kris Peeters (CD&V), Minister of Economy and Employment, wants to assess the BNB suggestion before making a decision. The minister does not have to follow BNB suggestions. The bank recommended bringing the maximum rate down to 2% back in 2012, but then-Minister of the Economy Johan Van de Lanotte (sp.a) refused and kept the maximum rate at 3.75%.

(Source: Belga)

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