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FMA ensures guaranteed entitlements for classical life insurance while also relieving the burden for insurance undertakings


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The low interest environment that has prevailed for a long time has made life difficult for insurance undertaking providing classical life insurance to be able to meet the guarantees agreed on during the era of high interest rates on a permanent basis via the capital markets. In 2015 the Austrian Financial Market Authority (FMA) instructed that an additional interest provision (ZZR; Zinszusatzrückstellung) should be formed, to ensure that such guarantees could also be met in the long term. The prevailing difficult economic environment has massively increased the volatility of the capital markets, with the average government bond yields weighted by outstanding amounts (UDRB; umlaufgewichtete Durchschnittsrendite österreichischer Bundesanleihen) that is particularly significant for the calculation of the provisioning requirement of the ZZR also being affected. For insurance undertakings the calculability of the allocation for long-term obligations is particularly affected as a result. The FMA has therefore adapted the formula for calculation of the ZZR to smooth out the provisioning requirement.

Security and Calculability

”Currently approximately € 1.1 billion has already been allocated to the additional interest provision,” remarked the FMA’s Executive Directors, Helmut Ettl and Eduard Müller: “On the one hand, the adaptation of the allocation formula ensures that the current target level of around € 1.5 bn under the dynamic formula will be reached as planned by 2024. On the other hand, this adaptation eases the pressure on insurance undertakings, by smoothing out and stabilising the annual ZZR provisioning requirement, so that they are in a better position from a planning point of view. This measure however in particular ensures that the guarantee promise in relation to life insurance made to insurance customers during the high interest phase is also able to be met in these continuing difficult times.”

The FMA has therefore adapted the formula for calculating the ZZR by amending the Maximum Interest Rate Regulation for Insurance Undertakings (VU-HZV; Versicherungsunternehmen-Höchstzinssatzverordnung). For calculating the reference interest rate the URDB of the previous year is no longer applied, but the average UDRB of the previous five years is used instead.

The amended Regulation enters into force at the end of the day on which it was announced.

Journalists may address further enquiries to:

Klaus Grubelnik (FMA Media Spokesperson)

+43/(0)1/24959-6006 or +43/(0)676/882 49 516

Regulator Information

Regulator Name: Financial Market Authority
Abbreviation: FMA
Jurisdiction: Austria

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