Death by a Thousand Cuts
Insurance in a Low Interest Environment
Over the past decades, interest rates have decreased to historic lows.
This situation of continued ultra-low interest rates significantly impacts clients, insurance companies and regulatory bodies.
Over the past decades, interest rates have decreased to historic lows (see figure 1). Despite the recent increase of the federal funds rate in the US, insurance companies and regulators will likely have to deal with low interest rates for years to come.
Different strategies can be applied to cope with the low interest rate environment.
We differentiate measures on the strategic vs operational level (vertical axis) and measures with short-term vs long-term effect (horizontal axis). A thorough analysis of the strategic positioning and the operating model can reveal the vulnerability and opportunities of a company and form the basis to identify the right mixture of strategies.