COLOGNE (dpa-AFX) - Life insurance customers are increasingly benefiting from the end of the interest rate slump. The first insurers have announced an increase in the current interest rate on the classic pension plan for 2024. At the same time, the influential German Association of Actuaries (DAV) is proposing to raise the actuarial interest rate - also known as the guaranteed interest rate - for the first time in decades. This interest rate currently stands at 0.25 percent. It could rise to 1 percent from 2025. "We think that an interest rate of 1.0 percent is justifiable in the long term," DAV Chairman Maximilian Happacher told Deutsche Presse-Agentur.

The interest rates that insurers were able to generate on the capital market were as high as they were 10 to 15 years ago, said Happacher. The guaranteed interest rate was last raised in 1994, when it was 4.0 percent for new contracts until the summer of 2000.

Changes to the guaranteed interest rate only apply to new life insurance policies. For old policies, for which there is still up to 4 percent, nothing changes in this respect. The Federal Ministry of Finance decides on the final level of the guaranteed interest rate.

The aim of the guaranteed interest rate is to prevent insurers from overreaching themselves with guarantee promises. However, since the interest rate slump, most life insurers have only been offering products with a reduced guarantee in new business.

Actuaries are actuaries who use methods of probability theory and statistics to evaluate financial uncertainties in insurance policies.

Current interest rate increases

The current interest rate on life insurance also includes profit participation, which insurers redetermine every year depending on the economic situation and the success of their investment strategy and which also affects existing customers. The current interest only relates to the savings portion after deduction of acquisition and administration costs, among other things.

The first insurers are increasing the profit participation for the coming year, including Ergo Lebensversicherung and Alte Leipziger. "Each company makes the decision according to its own situation. In principle, increased profit participation reflects higher interest-bearing new investments and, to a lesser extent, funds released from the additional interest reserve," explained Happacher.

Policyholders also benefit from released funds

During the interest rate slump, life insurers had to build up a capital buffer - known as the additional interest reserve - in order to secure the high guarantees for old contracts. This money could not be paid out to customers. At its peak, the capital buffer was filled with almost 100 billion euros. According to Happacher, the buffer is likely to amount to just under 90 billion euros in the current year due to the gradual release of funds.

"The sum will continue to fall in the coming years." The actuary does not anticipate a significant fall in interest rates on the capital market. "Inflation is unlikely to fall significantly below the two percent mark again in the foreseeable future. "In all likelihood, interest rates will therefore not fall back to their old lows for the time being."/mar/DP/zb