Reform of life insurance

The German government has submitted a proposal to reform life insurance, a measure designed to help insurers cope with low interest rates. Nearly 93 million contracts have been underwritten in a country with nearly 81 million inhabitants.

In the current economic context, insurers, whose average rate of return is set at 3.2%, can hardly find the investments likely to guarantee this level.

The guaranteed minimum rate of return on life insurance for contracts will be reduced to 1.25% as of January 1, 2015 after having already been lowered to 1.75% in 2012. The problem of unrealized gains is also addressed by the project. The State may also prevent the payment of dividends in weaker companies.