{"id":748,"date":"2016-04-05T18:11:42","date_gmt":"2016-04-05T16:11:42","guid":{"rendered":"https:\/\/www.fma.gv.at\/en\/?page_id=748"},"modified":"2023-08-02T09:25:05","modified_gmt":"2023-08-02T07:25:05","slug":"life-insurance-and-maximum-interest","status":"publish","type":"page","link":"https:\/\/www.fma.gv.at\/en\/insurance\/information-about-individual-insurance-classes\/life-insurance-and-maximum-interest\/","title":{"rendered":"Life insurance and maximum interest"},"content":{"rendered":"<?xml encoding=\"utf-8\" ?><p>The maximum interest rate selected has a great impact on the amount of the technical provisions (life\/health insurance provision) which must be established to ensure that insurance undertakings will be able to fulfil their obligations arising from life insurance contracts. The Financial Market Authority determines the maximum rate.<\/p><p><strong>Below you will find information about:<\/strong><\/p><p>\n<div class=\"card\">  <div class=\"card-header\" id=\"heading-6a38599596799\">    <h2 class=\"mb-0\">      <button class=\"btn btn-link btn-block text-left p-0 d-flex align-items-center justify-content-between\" type=\"button\" data-toggle=\"collapse\" data-target=\"#collapse-heading-6a38599596799\" aria-expanded=\"false\" aria-controls=\"collapse-heading-6a38599596799\">        <span>Interest rates for life insurance<\/span>        <i class=\"fa-solid fa-chevron-down text-primary\" aria-hidden=\"true\"><\/i>      <\/button>    <\/h2>  <\/div>  <div id=\"collapse-heading-6a38599596799\" class=\"collapse\" aria-labelledby=\"heading-6a38599596799\">    <div class=\"card-body\"><p><\/p><p>A life insurance policy pays two kinds of interest:<\/p><ul>\n<li>guaranteed interest; and<\/li>\n<li>variable bonuses.<\/li>\n<\/ul><p>The <abbr title=\"Financial Market Authority\">FMA<\/abbr>  determined the maximum interest rate permissible when a contract is first concluded in the Maximum Interest Rate Regulation for Insurance Undertakings (<a href=\"https:\/\/www.fma.gv.at\/download.php?d=2800\">VU-HZV<\/a>; <em>Versicherungsunternehmen-H&ouml;chstzinssatzverordnung<\/em>).<\/p><p>    <\/div>  <\/div><\/div><p>\n<div class=\"card\">  <div class=\"card-header\" id=\"heading-6a3859959680f\">    <h2 class=\"mb-0\">      <button class=\"btn btn-link btn-block text-left p-0 d-flex align-items-center justify-content-between\" type=\"button\" data-toggle=\"collapse\" data-target=\"#collapse-heading-6a3859959680f\" aria-expanded=\"false\" aria-controls=\"collapse-heading-6a3859959680f\">        <span>Calculation method for the maximum interest rate<\/span>        <i class=\"fa-solid fa-chevron-down text-primary\" aria-hidden=\"true\"><\/i>      <\/button>    <\/h2>  <\/div>  <div id=\"collapse-heading-6a3859959680f\" class=\"collapse\" aria-labelledby=\"heading-6a3859959680f\">    <div class=\"card-body\"><p><\/p><p>To calculate the maximum interest rate, average government bond yields weighted by outstanding amounts (<abbr title=\"umlaufgewichtete Durchschnittsrendite f&uuml;r Bundesanleihen \">UDRB<\/abbr> ) covering ten years are used, representing the average yields of government bonds traded on the Vienna Stock Exchange. These <abbr title=\"umlaufgewichtete Durchschnittsrendite f&uuml;r Bundesanleihen\">UDRB<\/abbr>  superseded the secondary market yields for government bonds (<abbr title=\"Sekund&auml;rmarktrendite\">SMR<\/abbr> ) on 1 April 2015. A safety margin of 40% is deducted from the average nominal rate of interest calculated on this basis. Consequently, the maximum rate must not exceed 60 per cent of the average yields gained with government bonds.<\/p><p>If the result of the <abbr title=\"Financial Market Authority\">FMA<\/abbr> &rsquo;s calculation is noticeably lower than the current maximum interest rate, the <abbr title=\"Financial Market Authority\">FMA<\/abbr>  will initiate proceedings to determine whether the rate should be adjusted. The maximum interest rate is then gradually adjusted by one fourth percentage point or multiples. In order to avoid continual adjustments, future developments are forecast and considered when determining the maximum rate.<br>\n    <\/div>  <\/div><\/div><p>\n<div class=\"card\">  <div class=\"card-header\" id=\"heading-6a38599596885\">    <h2 class=\"mb-0\">      <button class=\"btn btn-link btn-block text-left p-0 d-flex align-items-center justify-content-between\" type=\"button\" data-toggle=\"collapse\" data-target=\"#collapse-heading-6a38599596885\" aria-expanded=\"false\" aria-controls=\"collapse-heading-6a38599596885\">        <span>Amount of the maximum interest rate<\/span>        <i class=\"fa-solid fa-chevron-down text-primary\" aria-hidden=\"true\"><\/i>      <\/button>    <\/h2>  <\/div>  <div id=\"collapse-heading-6a38599596885\" class=\"collapse\" aria-labelledby=\"heading-6a38599596885\">    <div class=\"card-body\"><p><\/p><p>In response to the environment of consistently low interest rates, the <abbr title=\"Financial Market Authority\">FMA<\/abbr>  decreased the maximum interest rate for calculating technical provisions in the sectors of life insurance and state-sponsored retirement provision to <strong>0.0%<\/strong> as of 1 July 2022. The reduction is designed to ensure that the benefits guaranteed by new insurance contracts can be provided in the long term.<\/p><p>This does not necessarily entail a reduction in the total return of life insurance contracts, since the total return for the policyholder is made up of minimum interest plus bonuses.<\/p><p>The actual level of guaranteed interest must nevertheless not simply be aligned with the maximum interest rate permitted but be determined considering the individual product features as well as the <strong>principle of prudence<\/strong>.<\/p><p>    <\/div>  <\/div><\/div><p>\n<div class=\"card\">  <div class=\"card-header\" id=\"heading-6a385995968ac\">    <h2 class=\"mb-0\">      <button class=\"btn btn-link btn-block text-left p-0 d-flex align-items-center justify-content-between\" type=\"button\" data-toggle=\"collapse\" data-target=\"#collapse-heading-6a385995968ac\" aria-expanded=\"false\" aria-controls=\"collapse-heading-6a385995968ac\">        <span>Starting date for the new maximum rate<\/span>        <i class=\"fa-solid fa-chevron-down text-primary\" aria-hidden=\"true\"><\/i>      <\/button>    <\/h2>  <\/div>  <div id=\"collapse-heading-6a385995968ac\" class=\"collapse\" aria-labelledby=\"heading-6a385995968ac\">    <div class=\"card-body\"><p><\/p><p>This current maximum interest rate applies to insurance contracts that have been entered into after 30 June 2022 or whose insurance coverage commenced after 30 September 2022. In the case of existing life insurance contracts, the interest rate guaranteed upon signing will continue to apply.<\/p><p>    <\/div>  <\/div><\/div><p>\n<\/p><h2>Further information<\/h2><p>\n<div id=\"reference-6a385995968bc\" class=\"reference\"><h2 class=\"reference-heading\"><span class=\"fa-solid fa-scale-balanced fa-fw\" aria-hidden=\"true\"><\/span>Law<\/h2><p><\/p><p>Maximum Interest Rate Regulation for Insurance Undertakings (<a href=\"https:\/\/www.fma.gv.at\/download.php?d=2800\">VU-HZV<\/a>)<\/p><p><\/div><p>\n<div id=\"reference-6a385995968ce\" class=\"reference\"><h2 class=\"reference-heading\"><span class=\"fa-solid fa-link fa-fw\" aria-hidden=\"true\"><\/span>Link<\/h2><p><\/p><p>The Oesterreichische Nationalbank (OeNB) publishes the <a href=\"https:\/\/www.oenb.at\/en\/Statistics\/Standardized-Tables\/interest-rates-and-exchange-rates\/austrian-government-bond-yields.html\" class=\"external\" target=\"_blank\" rel=\"noopener\">average government bond yields weighted by outstanding amounts (UDRB)<\/a><\/p><p><\/div><p>\n<div id=\"reference-6a385995968dc\" class=\"reference\"><h2 class=\"reference-heading\"><span class=\"fa-solid fa-download fa-fw\" aria-hidden=\"true\"><\/span>Download<\/h2><p><a href=\"\/wp-content\/plugins\/dw-fma\/download.php?d=880&nonce=b5d3cf3a33c31690\" class=\"internal single-document-reference piwik_download\">H\u00f6chstzinss\u00e4tze bei Versicherungsunternehmen (<span class=\"sr-only\">Format: <\/span>xlsx, <span class=\"sr-only\">Size: <\/span>16,6 KB, <span class=\"sr-only\">Language: <\/span>German)<\/a><\/div><p>\n<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The maximum interest rate selected has a great impact on the amount of the technical provisions (life\/health insurance provision) which &#8230;<\/p>\n","protected":false},"author":60,"featured_media":0,"parent":8191,"menu_order":5,"comment_status":"closed","ping_status":"closed","template":"","meta":{"inline_featured_image":false,"footnotes":""},"class_list":["post-748","page","type-page","status-publish","hentry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.8 - 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