The Effects To Surrender Rate Of Life Insurance Product Caused By Risings Of Interest Rate And Countermeasures Research

Since July of 1993, our country had entered a long cycle of dropping interests. Interest rate of fixed bank deposit of one -year had dropped by 8 times in succession from 10.98% since 1993 to 1.98% in 2002. In the middle of the 9-year long cycle of dropping interests, life insurance companies had accumulated the enormous profit to decrease.The Central Bank of our country has raised the interest rate for the first time in 11 years. In October of 2004, interest rate of fixed bank deposit of one -year was raised from 1.98% to 2.25%. Economists of our country generally predict though this increase of interest rate was only 0.27 percentage points, but mean the interest rate of our country began to enter a new cycle of raising interest rate and the interest rate would also continue raising in the near future. It is a good news because the increase of interest rate will help remedy the profit loss caused by interest rate difference for a long time. But we can't ignore the unfavourable factors brought to insurance company caused by the increase of interest rate. They worth studying conscientiously and treating positively. This thesis has analysed the effects of the cycle of raising interest rate on life insurance company from the product surrender rate aspect and has proposed countermeasures and suggestions.This thesis has reviewed the history of the process of marketization of interest rate of our country and the change of interest rate of our country at first, and has predicted the variation tendency of the interest rate according to the present macroeconomy situation.This thesis's foundation is the actuarial theory of life insurance. And this paper regards life insurance products on the market as the prototype and simulates life insurance products on the market, then sets up actuarial model and analyses the impact on surrender rate of life insurance products of rise of the interest rate quantitatively.On the basis of quantitative analysis, this thesis has made a qualitative analysis further. Finally, this paper has proposed that which kind of tactics should be adopted in order to tackle the risk caused by the increase of surrender rate in the cycle of raising interest rate.