An increase in interest rates by central banks can have a significant impact on insurance companies, their business model, and customers. Here are a few ways this could happen: Investment Income: Insurance companies typically invest the premiums they collect from customers in bonds and other fixed-income securities. An increase in interest rates can lead to higher returns on these investments, which can improve the profitability of insurance companies1. Liability Reserves: Insurance companies are required to set aside funds to cover future claims, known as “liability reserves.