Overview
On October 9, China’s financial regulator issued the “Rules on Property Insurance Product Development” (JinGui [2026] No. 9), comprising 8 chapters and 41 articles, effective November 1, 2026, replacing the 2016 “Guidance” that had run for nearly a decade. Elevating the rules from “guidance” to “regulation,” the document lists eight prohibited product types and adds a dedicated chapter on supplementary riders, building a closed-loop lifecycle system covering “initiation–development–review–approval–filing–revision–cleanup–exit.”
The eight prohibitions include: no insurable interest, no actual loss from the insured event, certain or impossible occurrence, speculative-risk coverage, products with no real protection meant purely for price wars or hype, promises to refund premiums if no claim occurs, and risk-bearing without charging premiums. Clauses targeting “no real protection / pure price-hike-or-cut hype” and “premium rebates for no-claim” directly attack gimmick products and disguised rate-cut violations.
Background & Interpretation
1. Regulatory and Industry Context
In H1 2026, 87 property insurers wrote about RMB 987.5bn in premium income, up only ~2.5% YoY, while 84 had a combined ratio above 100%, leaving profitability to improve. Long-standing issues—product homogenization, rider stuffing, rate–risk disconnect and lax post-launch management—prompted the reform. The rules deepen non-auto comprehensive governance into the product layer.
2. Core Drivers and Mechanisms
The logic is not mere tightening but redefining development boundaries—from “can it be sold” to “why develop it.” Firms must generally adopt industry model clauses and benchmark pure-risk loss rates, justifying any deviation. A dedicated rider chapter lists five discouraged types, banning “using riders to substitute for main coverage.” Accountability is enforced: the top executive chairs a product committee; the CCO and chief actuary bear direct responsibility for clauses and rates.
3. Market Structure and Value-Chain Impact
Article 40 exempts auto, agriculture, marine, policy credit and short-term health/accident insurance, focusing on commercial non-auto lines—enterprise property, liability, engineering, homeowner, cargo and credit/guarantee—where underwriting margins are thinnest and improvement space largest. Analysts expect competition to shift from “riders-for-differentiation, expense-for-scale” to risk pricing and service capability.
Implications & Outlook
Near term, products enter full-lifecycle supervision; innovation must fit the market. Medium term, cleaning up rate chaos and lifting pricing adequacy will make large insurers’ risk-pricing and compliance edges explicit, improving underwriting profit.
Takeaways for Industry Participants
- Insurers should stand up product committees and internal accountability, cleaning up long-unused clauses.
- Smaller insurers can use model clauses to cut compliance/actuarial cost and focus on risk-reduction services.
- Reinsurers and brokers should re-evaluate non-auto product structure and rate adequacy.
This column compiles industry information and shares technical perspectives; it does not constitute investment advice.