Xin Lang Cai Jing·2026-01-21 13:55Core Viewpoint - The core indicator for pricing life insurance products, the predetermined interest rate research value, has been updated to 1.89%, marking a continuous decline over four quarters since the dynamic adjustment mechanism was implemented in January 2025, with the rate decreasing from 2.34% to 2.13%, 1.99%, and 1.90%, with the latest adjustment being a minor drop of 1 basis point, indicating a shift from rapid decline to moderate stabilization [1][2][11]. Group 1: Predetermined Interest Rate Dynamics - The current predetermined interest rate research value is 1.89%, and the upper limit for ordinary life insurance has been reduced from 2.5% to 2% [3][12]. - The adjustment mechanism stipulates that a reduction in the predetermined interest rate is only necessary if the upper limit exceeds the research value by 25 basis points for two consecutive quarters; currently, the difference is only 11 basis points, not triggering a reduction [1][2][12]. - If the research value remains below 1.75% for the first two quarters of 2026, the earliest adjustment could occur in the third quarter of 2026, making the first half of 2026 a critical observation period [1][2][12]. Group 2: Market and Economic Context - The macroeconomic environment shows a continued decline in interest rates, with the 10-year government bond yield rising by 25 basis points to 1.85% in 2025, ending a four-year downward trend, although this level remains historically low [3][12]. - The 5-year LPR has remained stable at 3.5% for eight consecutive months, while some banks have lowered their 5-year fixed deposit rates to between 1.3% and 1.8%, further reducing the yield of similar savings products [4][12]. - Recent structural interest rate cuts by the central bank, including a 0.25 percentage point reduction in various lending rates, signal a potential easing of monetary policy, although it may not immediately affect the LPR [4][13]. Group 3: Industry Growth and Trends - The life insurance sector is experiencing a robust start to 2026, with many companies reporting double-digit growth in new premium income, driven by a shift in consumer preference towards stable, low-risk investment options amid a low-interest-rate environment [6][16][17]. - Major insurers like China Life and Ping An have reported new premium income growth exceeding 70%, with China Life's new premium income increasing by 76% from New Year's Day to mid-January [17]. - The insurance industry is transitioning from merely being a financial product to becoming a core component of family wealth planning and lifelong social security, emphasizing the integration of long-term returns and protection features in product offerings [8][16][17].