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FMA reduces the maximum guaranteed rate in life assurance to 0.5% from 1 January 2017

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The Austrian Financial Market Authority (FMA) has cut the maximum guaranteed rate in classic life assurance for new contracts with effect from 1 January 2017 from 1.0% to 0.5%. This change is laid down in the amendment to the FMA’s “Maximum Interest Rate Regulation for Insurance Undertakings” (VU-HZV) which was published in the Federal Law Gazette today. This latest lowering of the maximum guaranteed interest rate, which previously had been reduced from 1.5% to 1.0% with effect from 1 January 2016, is necessary due to the sustained trend of low interest rates. In July 2016 the average government bond yield weighted by outstanding amounts (UDRB), the significant benchmark for the guaranteed interest rate, entered negative territory for the first time. In setting the maximum guaranteed rate, the FMA orients itself to the 10 year average of the UDRB, while also applying a 40% haircut. This measure is intended to ensure that guaranteed benefits from insurance contracts can also continue to be fulfilled in the long term.

The guaranteed minimum interest rate refers solely to the savings premium of the life assurance policy, i.e. the premium paid in less taxes, risk and cost shares. Potential profit sharing is therefore unaffected. The respective current maximum guaranteed interest rate also only applies to contracts newly concluded at this time, with the guaranteed interest rate in force at the time of conclusion of the contract continuing to apply for existing contracts.

The maximum guaranteed interest rate is also not applicable across the board for all new contracts. It does however define the legally permitted ceiling of the guaranteed interest rate, the specific level of which must be determined taking into consideration the individual characteristics of the respective product in accordance with the prudent person principle.


Journalists may address further enquiries to:

Klaus Grubelnik (FMA Media Spokesperson)

+43/(0)1/24959-6006, +43/(0)676/882 49 516

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