Members of the Liberal Democratic Party will set up an informal study group to examine whether life insurers should be allowed to cut the interest rates they guaranteed their policyholders, LDP lawmakers said Thursday.

The controversial idea is being proposed as low interest rates and falling premiums continue to eat away at insurers’ profitability in what is known as a “negative spread,” in which the yields from companies’ investments fail to keep up with those promised to their policyholders.

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