The return an insurer commits to in advance and uses to discount its commitments, capped by regulation to limit the promise.
The technical interest rate is the return an insurer builds into its pricing and reserving in advance, and therefore commits to deliver whatever the markets do. It cuts both ways: the higher it is, the lower the premium charged for a given benefit, but the heavier and longer the guarantee. This is why regulation caps it by reference to average government bond yields, with a lower ceiling the longer the commitment, so that no insurer can buy market share by promising a return it cannot sustain over thirty years. The history of the industry is dotted with failures born of a technical rate set too generously in a high rate period, the best known being that of Nissan Mutual Life in Japan in 1997. The problem solved is the temptation of a long term promise funded by a short term environment, a temptation no internal discipline has ever proved enough to contain.
The average return on French euro funds fell from 4.1% in 2007 to 1.3% in 2021, before recovering toward 2.6% in 2023 on the regulator's figures. Contracts written in the 1990s with a guaranteed technical rate of 4.5% stayed on the balance sheet throughout that descent, and it is that old, non-negotiable promise that made the regulatory ceiling indispensable.
taux d'actualisation garanti, taux minimum garanti