Traditional Life Insurance Products are Under Pressure

Gregor Wolters and Sven Panz

Due to the prevailing low interest rate environment, traditional life insurance products that contain longer-dated guarantees (especially these with guaranteed returns) are becoming increasingly expensive to offer for life insurance companies in Europe. The introduction of regulatory capital regimes like the Swiss Solvency Test (SST) and Solvency II (SII) makes this transparent and additionally leads to further capital requirements for such products. Hence, insurance companies show a strong interest in reducing capital requirements by reshuffling their product offering.

Savings-oriented life insurance products can be attractive, as they offer risk transfer, compensation for inflation, a reasonable capital growth, certainty of investment guarantees and savings for retirement, as well as tax benefits. There is still a reasonable need for these offerings and therefore these products are still in demand from retail clients. New kinds of life insurance policies with a savings and investment element have to combine safe minimum redemption amounts with attractive upside participation. On the other hand, the product design should result in lower risk capital requirements for the insurer

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to Risk.net? View our subscription options

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here