Core Viewpoint - The insurance industry is experiencing a downward trend in the preset interest rates for participating insurance products, with the current rate at 1.5%, down from the regulatory cap of 2.0% set last October, indicating a historical low for preset rates [1][4][5]. Group 1: Current Market Situation - The preset interest rate for participating insurance products has been reduced to 1.5%, which is a significant drop from the previous cap of 2.0% [4][5]. - The adjustment in the Loan Prime Rate (LPR) is expected to lead to further reductions in preset interest rates for insurance products, marking a historical low [5][6]. - Insurance companies are already preparing for the adjustment of preset rates, with some having products ready for the new rates [19]. Group 2: Regulatory Changes and Implications - The Financial Regulatory Authority has introduced a mechanism to link preset rates to market rates, which will guide insurance companies in pricing their products more prudently [15][16]. - The preset rate for ordinary insurance products is currently capped at 2.5%, while the caps for participating and universal insurance products are 2.0% and 1.5%, respectively [16]. - The preset rate research values for the first and second quarters were 2.34% and 2.13%, respectively, indicating a potential for further reductions [17][18]. Group 3: Historical Context and Trends - Over the past decades, preset rates for insurance products have been adjusted multiple times, with significant changes occurring in 1999, 2013, and 2019, each lasting for extended periods [21][22]. - The long-term decline in marginal capital returns has led to a consistent decrease in preset rates, aligning them with the downward trend in bank deposit rates [22][24]. - The insurance industry is expected to face challenges in maintaining consumer interest as preset rates decline, potentially impacting sales of insurance products [24][30]. Group 4: Market Reactions and Future Outlook - The insurance market has seen a shift towards promoting participating insurance products, but consumer awareness and acceptance remain low [29][30]. - Sales personnel are facing increased challenges in selling insurance products as preset rates decline, as consumers often compare these products to bank deposit returns [30][31]. - The industry is urged to adapt by developing floating yield insurance products and innovative non-interest-sensitive offerings to better meet market demands [27][31].

Core Viewpoint - The insurance industry is experiencing a downward trend in preset interest rates for insurance products, with the current maximum preset interest rate for participating insurance products being lowered to 1.5%, marking a historical low [1][4][8]. Group 1: Current Market Trends - The preset interest rate for participating insurance products has been reduced to 1.5%, down from the previous regulatory cap of 2.0% established in October of last year [1][4]. - Several insurance companies, including Zhongyi Life and Tongfang Global Life, have launched products with a preset interest rate of 1.5% [2][3]. - The downward adjustment of preset interest rates is expected to continue, with industry insiders predicting further declines [1][4]. Group 2: Regulatory Changes - The China Insurance Regulatory Commission has issued a notification to establish a mechanism linking preset interest rates to market rates, which will guide insurance companies in pricing their products [4][5]. - The notification outlines that if the maximum preset interest rate exceeds the research value by 25 basis points for two consecutive quarters, a downward adjustment will be required [5][6]. Group 3: Historical Context - Historically, preset interest rates for insurance products have been adjusted several times, with significant reductions occurring in 1999, 2013, and 2019, leading to a long-term downward trend [7][8]. - The preset interest rates peaked in the early 1990s, reaching as high as 7% to 10%, but have since declined significantly due to changes in the economic environment [7][8]. Group 4: Industry Challenges - The insurance industry is facing multiple challenges, including increased risk of interest spread losses, changing customer demands, and intensified competition [3][4]. - The decline in preset interest rates is expected to reduce the attractiveness of insurance products to consumers, complicating sales efforts for insurance companies [8][9]. Group 5: Future Outlook - The insurance sector is urged to innovate by developing floating yield insurance products and non-interest-sensitive products to adapt to the changing market [9][10]. - Despite the challenges, the insurance industry has seen growth due to increasing household wealth and changing asset allocation preferences among consumers [10].