In today’s low interest rate environment, you could say that insurers are a lot like divers: For a while, they are fine in the deep. But if the dive lasts longer than expected, they risk running out of oxygen at some point. On the other hand, coming back up too quickly can result in decompression sickness.
Divers who surface from very deep water too quickly can suffer serious symptoms. At worst, these can be life-threatening. Divers are therefore advised to make a slow but timely ascent to the surface. It’s probably safe to say that many insurers are hoping that a similar scenario will unfold with respect to interest rates – in other words, a gradual rise.