The China Insurance Regulatory Commission (CIRC) plans to let insurance companies decide the assumed interest rate on conventional life insurance policies.
China currently caps the assumed, or guaranteed, interest rate, the return an insurer gives to policyholders, at 2.5%. The higher the rate, the greater the cost for the insurance company.
Rumours that deregulation was pending drove the share prices of life insurers sharply lower late on Friday. China Life closed down 1.32% in Shanghai, whereas the benchmark index surged 2.31%.
In a statement on its website, www.circ.gov.cn, the CIRC said it was seeking feedback on its proposals by July 20.
Analysts said the overall impact of lifting the cap would be limited since most policies sold in China are of a different kind.
