Requierements for Determining Technical Interest Rate in Iranian Life insurance Industry

Subject Areas : Journal of Investment Knowledge

Aziz Ahmadzadeh ¹ , Mojtaba Abed ²

1 - Ph.D. in Financial Economics, Assistant Professor-Insurance Research Center-Iran.
2 - Ph.D. Candidate in Actuarial Science- Expert of Actuary in Central insurance of I.R. Iran.

Received: 2021-01-02 Accepted : 2021-04-17 Published : 2024-03-20

Keywords: Technical interest rate, Life insurance, discount rate, financial supervision, Guaranteed interest rate,

Abstract :

Thus, the analysis of the roots of technical interest rates, types of models for determining technical interest rates and identification of variables that should be considered in determining it and how and quality of monitoring it, has been done using the documentary method to the governing frameworks. Then, based on the results, a questionnaire was designed to confirm and complete the framework and sent to relevant experts. The results of the study show that based on the reviewed studies, the use of time series models is the main method of determining the technical interest rate in insurance companies, but in some cases, structural models have also been used.But in Iran, the use of time series models for determination of technical interest rates are not mentioned by experts and the majority of experts support structural models that taking into account the economic variables including inflation, interest rates, exchange rates and gold respectively (in order of importance) to determine technical interest rates. In the field of supervision, although there are different patterns, but the use of interest rates on long-term bonds with the highest credit rating, has been the common denominator of all countries to determine the maximum technical interest rate. It seems that the high weighting of experts on the variables of inflation, exchange rate and gold in Iran is due to the sharp fluctuations in the value of the national currency, which is the outstanding difference between Iran and other countries under study. Finally,

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