SHANGHAI, July 24: China’s State Council, or cabinet, has approved plans to let insurers set interest rates on their insurance products, the 21th Century Business Herald reported on Wednesday.
China sets many restrictions on interest rates on insurance products, including a 2.5 percent upper limit on pre-determined rates for life insurance products.
Details were being worked out by the China Insurance Regulatory Commission (CIRC) and would be announced later, the non-official but major business newspaper said.
The report said the news was leaked during a mid-year insurance supervisory meeting held earlier this week.
The move to let insurers set their own rates follows a slew of wider reforms in the financial sector.
Some economists have blamed tight regulation for constraining the industry’s development even as Beijing seeks to improve the country’s welfare safety net and free up domestic consumption.
Without a competitive insurance industry, they say people hoard cash to save for a rainy day instead of spending it.
In a significant step last week, China’s central bank removed controls on bank lending rates in a long-awaited move that signalled the new leaderships determination to push on with market-oriented reforms.
(agencies)
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