Author: Yang Qianwen
Comprehensive regulatory upgrades for property insurance product development.
The National Financial Regulatory Administration recently issued the "Provisions on the Management of Property Insurance Product Development" (hereinafter referred to as the "Provisions"), an updated revision of guidelines released nearly a decade ago. The Provisions address practical issues such as irregular product development, unclear positioning of riders, and incomplete management processes. By supplementing and refining regulatory rules, it continues to strengthen oversight of insurance products.
Industry insiders view this document, which sets clear red lines and signals strong regulatory oversight, as a key guiding framework for property-casualty insurance product regulation and a significant step in deepening comprehensive non-auto insurance governance toward the product level. "In the medium to long term, industry competition is expected to shift from differentiating through riders and trading volume for fees to risk-based pricing and service capabilities," said Liu Xinqi's team, Head of Non-Banking Research at Guotai Haitong Securities.
From "Guidance" to "Mandate": Product Regulation Upgrades
In 2016, the former China Insurance Regulatory Commission issued the "Guidelines for Product Development of Property and Casualty Insurance Companies" (hereinafter referred to as the "Development Guidelines"), which came into effect on 1 in month 1 of year 2017. The current "Management Regulations" are a revision and enhancement of the "Development Guidelines," with a concurrent name change.
"The shift from 'Development Guidelines' to 'Management Regulations' significantly strengthens the institutional framework for product oversight," said the Liu Xinqi team.
Long Ge, Deputy Director of the Innovation and Risk Management Research Center at the University of International Business and Economics and Co-founder and General Manager of Zhongtuo Bang, stated that in recent months, several issues have emerged in the property insurance sector. These include insufficient accountability for product development responsibilities, unclear policy terms, unreasonable premium pricing, blurred boundaries for innovative products, "pseudo-innovation," unfair liability clauses, and non-compliant filing processes. Such problems disrupt market competition and often harm consumer rights. The new "Management Regulations" now provide the industry with clear requirements and well-defined standards for product development.
Notably, the "Management Regulations" specify that motor vehicle insurance, agricultural insurance, marine insurance, policy-based credit insurance, short-term health insurance, and accident insurance shall comply with their respective regulations.
Industry insiders believe the new regulations prioritize non-auto products beyond accidental health and agricultural insurance. "The focus of the new rules lies in commercial non-auto lines such as property, liability, engineering, home, cargo, and credit & surety insurance—segments where underwriting profitability has been relatively weak and room for operational improvement is significant," said Ge Yuxiang, Chief Non-Banking Financial Analyst at Zhongtai Securities.
Clearly define the "negative list" for insurance product development.
According to Long Ge, the "Management Regulations" establish a complete closed-loop product management system encompassing "project initiation, development, multi-department review, approval, filing, revision, periodic cleanup, and exit." The regulations clarify responsibilities at all organizational levels and require property and casualty insurers to implement internal accountability mechanisms to ensure prudent product development. Additionally, products with high innovation, unique business models, or elevated underwriting risks will be included in the review scope to better address risk exposure. "Unconstrained product innovation, designing products that contravene regulatory guidance under the guise of innovation, and inadequate risk identification and assessment can create significant operational risks," Long Ge stated.
Notably, during the product development phase, the new "Management Regulations" further specify eight categories of prohibited insurance products: those lacking contingency, covering speculative risks, offering no actual coverage, designed solely for malicious speculation, violating social public order and good morals, promising premium refunds or other improper benefits if no claim occurs, and those that实质上 assume risk protection without charging premiums. "This closes off supply space for gimmick products with no real coverage or price-cutting hype," said Ge Yuxiang.
Additionally, regarding the formulation of terms and rates, the previous "Development Guidelines" stated that "insurance companies may refer to industry model clauses and industry pure risk loss rates when developing insurance products." In contrast, the current "Management Regulations" now specify that "for cases where industry model clauses or benchmark pure risk loss rates exist, property and casualty insurers shall, in principle, use them." It further requires that any company not using these must provide reasons for non-adoption and detail the differences in its feasibility report or actuarial report.
The National Financial Regulatory Administration states that developing and using industry model clauses and benchmark pure risk loss rates is a key measure to enhance the standardization and normalization of industry clauses, as well as improve the precision and scientific rigor of pricing. While respecting companies' differentiated operational paths, this "Management Regulation" strengthens the effectiveness of model clauses and pure risk loss rates through detailed requirements, promoting overall improvement in product quality across the industry.
However, Ge Yuxiang noted that nationwide non-auto insurance documents currently cover only a few categories, such as property insurance for textile enterprises, road construction engineering loss tables, and standard liability safety insurance clauses. National model clauses for enterprise property insurance and employer's liability insurance remain absent. Future attention should be directed toward the release schedule of model clauses and loss tables for key non-auto insurance products by industry associations and actuarial societies.
Regarding product exit, the "Management Regulations" require timely verification, revision, or deregistration of premium rates and terms that have not been used for three consecutive years and are not industry benchmarks. The status of such rates and terms on the industry platform must be updated within 10 days after deregistration.
Prohibit "substituting attachments for the main content"
Compared to the "Development Guidelines," a key change in this "Management Regulation" is the establishment of a dedicated chapter for riders for the first time, addressing the previous industry situation where rider products accounted for a high share but lacked detailed rules.
The National Financial Regulatory Administration states that riders supplement main policies to maintain their stability while adding appropriate flexibility, offering consumers more comprehensive and targeted insurance coverage. Riders should be closely related to the main policy, extending, reducing, or adjusting its content. In practice, some insurers have incorrectly designed substantially independent clauses or those with weak ties to the main policy as riders, or even used riders to correct errors in the main policy.
To address these pain points, the "Management Regulations" systematically define at the regulatory level the requirements for supplementary insurance clauses and rates, clarify development objectives, and mandate necessity assessments.
Additionally, the "Management Regulations" specify a negative list for product development of riders, including: (1) where the applicant or insured differs from that of the main insurance; (2) where the rider has weak relevance to the main insurance; (3) where the purpose is to correct errors in the main insurance; and (4) where the clause framework is comprehensive and the coverage is sufficiently independent, warranting development as a main insurance policy. These represent 5 categories of scenarios.
Industry experts note that, due to market competition, some riders have been distorted or even used as substitutes for main policies. The new regulation's dedicated chapter will help steer the industry back to the original purpose of rider development, ensuring clear product structures and well-defined coverage while mitigating risks such as clause conflicts, claim disputes, and compliance issues.
Shift from competing on premium rates to competing on actuarial precision and service quality.
"This revision represents a substantive measure in the comprehensive governance of non-auto insurance products," said the Liu Xinqi team. In the medium to long term, standardizing riders and phasing out certain products will enhance clause transparency and reduce claims disputes. Industry competition is expected to shift from differentiating via riders and exchanging fees for scale toward risk-based pricing and service capabilities. Leading companies are well-positioned to capitalize on their product management systems and data accumulation.
Ge Yuxiang also believes that the previous mismatch of "low base premium + supplementary riders for liability coverage" and the non-compliant practices of filing one version while executing another were the main drivers of irrational competition. With both now cut off, this is expected to clean up the chaos in product terms and pricing rates across the industry, improving the adequacy of product pricing. Meanwhile, the new regulations' full lifecycle management combined with deregistration mechanisms will accelerate the phase-out of long-tail homogeneous products. From the broader perspective of comprehensive non-life insurance governance, according to reports by the China Banking and Insurance Daily, enterprise property insurance clauses resubmitted between 2026 and 1–7 months decreased by 2.8 ten-thousand compared to before the governance, while employer liability insurance policies dropped by over 600. For enterprise property insurance and employer liability insurance that have completed resubmission, commission rates fell year-on-year by approximately 6 and 5 percentage points, respectively.
Long Ge stated that the new regulations will undoubtedly raise the threshold for property insurance product development and management across the industry. In the short term, this will increase the workload for institutions to establish systems and rectify existing products. Long-term, it will eliminate extensive product competition models, guide the industry back to the core principle of loss compensation in insurance, and promote high-quality development of the property insurance sector. For consumers, the new regulations aim to reduce information asymmetry by eliminating unfair and overly complex clauses at the source, making products fairer and more transparent. However, consumers must also enhance their insurance literacy: before purchasing, carefully review coverage responsibilities, exclusions, and claim conditions to make rational choices aligned with their risk profiles. "High-quality development of the property insurance industry requires coordinated efforts from regulators, insurers, and consumers," Long Ge said.
