Actuarial Assumptions and the Interest Rate Environment: Implications for Asian Life Insurers

The shift from the prolonged low-rate era to a higher-for-longer regime has significant implications for the reserving, pricing and investment strategies of Asian life insurers. Many policies priced during the low-rate era embedded guaranteed return assumptions that now look exposed. Simultaneously, rising discount rates have reduced the present value of long-duration liabilities. We examine how actuarial teams and boards should be revisiting assumptions, stress testing positions and communicating changes to regulators.