Every Economic Daily Reporter | Tu Yinghao
On the evening of 9 month 29, power equipment listed company Changyuan Group (Shareholder Rights Protection) (SH600525, share price 4.86 yuan, market cap 64.09 billion yuan) announced that it plans to purchase liability insurance for itself and all directors and senior executives. The coverage limit will not exceed 1 billion yuan, with annual premiums capped at 50 million yuan, subject to the final amounts specified in the insurance contract. The insurance term is 12 months per period. Notably, this represents a significant increase from the previous four years' premium cap of "not exceeding 2000 million yuan per year." The announcement did not explain the specific reasons for this substantial increase in coverage.
"Increasing coverage limits for individual companies has become a widespread trend in A-shares, but the move to '5 times' stands out as particularly significant," said Wang Min, partner at Shanghai Jianwei Law Firm. Speaking to The Daily Economic News (referred to as "the reporter"), he explained that the immediate trigger was the company's actual exposure of risks, where the original 2000 million yuan limit no longer matched the emerging claims exposure. In Wang's view, the value of D&O insurance lies in being prepared in advance—the coverage limit should align with risk exposure rather than waiting until after risks materialize to make adjustments.
Although the coverage limit has surged to 5 times, the premium expenditure listed in the plan has not increased proportionally. According to Wang Min, D&O insurance rates are currently on a downward trend; with a fixed premium budget, public companies can secure significantly higher limits. Furthermore, increasing coverage plays a practical role in stabilizing current directors and officers and retaining independent directors.
According to the insurance plan disclosed in the announcement by Changyuan Group, the insured parties include the Company and all its directors and senior officers (subject to the scope defined in the insurance contract). The liability limit shall not exceed RMB 1 billion (specific amount subject to the insurance contract), with annual premiums capped at RMB 50 thousand. The insurance term is 12 months per period (start and end dates are subject to the insurance contract; renewal or new coverage may be arranged subsequently).
A review of the company's historical announcements by The Economic Daily reveals that from 2022 to 2025, its insurance coverage remained consistent for four consecutive years: an annual liability cap not exceeding 2000 million yuan and annual premiums not exceeding 25 million yuan. All past disclosures explicitly stated that directors' and officers' (D&O) liability insurance was purchased from PICC Property and Casualty Company Limited. Regarding disclosure timing, previous related announcements were typically released between 3 and 4. In contrast, this latest announcement was disclosed at the end of 9, nearly six months later than before, and notably omits the name of the insurer.
On 7 14, Changyuan Group disclosed the "Announcement on Receipt of the Administrative Penalty Decision." The announcement stated that on 2025 12 27, the company revealed it was under investigation by the China Securities Regulatory Commission (CSRC) for suspected violations related to information disclosure. On 2026 6 26, it received the "Notice of Preliminary Administrative Penalties" from the Shenzhen CSRC Bureau, and has since formally received the "Administrative Penalty Decision." Investigation revealed that between 2023 7 and 2025 1, then-Chairman and General Manager Wu Qiquan directed the company to transfer funds via advance payments, resulting in non-operating fund occupation by related parties totaling approximately 10.87 billion yuan. Of this amount, 8.42 billion yuan was not disclosed in a timely manner, representing 15.16% of the company's most recently audited net assets.
The Shenzhen Securities Regulatory Bureau has decided to issue warnings and impose fines of 160 million yuan, 180 million yuan, and 80 million yuan on the company, Wu Qiquan, and Yao Ze (Director and Chief Financial Officer at the time), respectively. The company subsequently supplemented its confirmations of related-party transactions and corrected accounting errors. Wu Qiquan repaid the principal and interest of the misappropriated funds in 2025, 4, and 9. He resigned as President in 2025 and as Director and Chairman in 4. The announcement stated that all relevant issues have been rectified, no other risk warnings or mandatory delisting due to major violations were triggered, and the company's operations remain normal.
Wang Min pointed out that, with respect to coverage attribution, this claim should be based on the date the company received the "Notice of Case Filing." Directors and Officers (D&O) insurance operates on a claims-made basis; coverage is triggered by the first claim made or the first knowledge of the incident, not by when the violation occurred or the loss was determined. The company received the "Notice of Case Filing" in 2025 year, 12 month, which falls within the 2025 policy period. Therefore, subsequent civil claims by investors, as well as defense costs incurred by the company in responding to the investigation filing, submitting statements and defenses, administrative penalty procedures, and subsequent civil litigation, shall all be covered under the 2025 policy up to its limit. Any amounts exceeding the limit must be borne by the company. This also explains the practical rationale for increasing the coverage limit in this case.
Wang Min emphasized that administrative fines cannot be insured as a matter of law. Per the "Measures for the Supervision of Liability Insurance Business," insurers are prohibited from covering criminal fines or administrative fines through liability insurance. Therefore, the 420 million yuan fine must be borne by the penalized entity and cannot be transferred via D&O insurance.
"This penalty will indeed have a substantive impact on future insurance pricing," Wang Min stated in an interview. Entities that are under investigation or have been penalized are considered risk exposures in underwriting. Insurers typically respond by increasing premiums, raising deductibles, adding specific exclusions, and, in severe cases, declining coverage altogether.
However, based on the insurance plan disclosed in the Changyuan Group announcement, the premium rate calculated from the 2022–2025 plan is approximately 1.25% (25 ten-thousand yuan / 2000 ten-thousand yuan), while the rate for the current plan is approximately 5‰ (50 ten-thousand yuan / 1 billion yuan), indicating a decline rather than an increase in insurance rates. According to Wang Min, the lower rate this time compared to historical levels primarily reflects a downward trend in overall market rates and does not signify an improvement in the company's individual risk rating.
According to the "China Listed Company D&O Insurance Market Report (2026)" (hereinafter referred to as the Report), the simple average premium rate for D&O insurance on A-shares rose from 3‰ in 2017 to 6‰ in 2022, then reversed trend in 2023 and continued to decline. By the end of Q4 2025, it had fallen below 5‰, with actual average rates likely even lower. The Report attributes this downward trend to an increase in underwriters, rapid expansion of market capacity, and opaque, delayed claims disclosure that triggered irrational competition.
In practice, D&O insurance pricing must account for industry conditions, stock performance, regulatory penalties, litigation risks, corporate governance, and the personal circumstances of directors and officers. As a result, premium rates for individual companies may deviate significantly from market averages.
Report statistics show that the most common D&O insurance coverage limits for A-share listed companies range from 4000 to 6000 million RMB, followed by 8000 to 1 billion RMB. The most frequent limits are 5000 million and 1 billion RMB. Among A-share companies that newly purchased D&O insurance in 2025, manufacturing firms continued to lead in volume, with "Computer, Communication, and Other Electronic Equipment Manufacturing" having the highest count, followed by "Special Equipment Manufacturing" and "Software and Information Technology Services." In terms of penetration rate, real estate, wholesale trade, and power generation have exceeded 60%.
Wang Min told The Economic Observer that the most significant increase in coverage amounts occurred for four types of companies: tech innovation enterprises, firms with a history of regulatory inquiries or penalties, companies planning capital market activities such as refinancing or M&A, and those with high institutional investor ownership.
The average coverage amount for D&O insurance among listed companies is rising, but Wang Min points out that under the special representative litigation system, the scale of compensation per case has changed. "In the Kangmei Pharmaceutical case, the court ordered compensation of 24.59 billion yuan, with minimum joint and several liability for directors, supervisors, and senior executives exceeding 1.2 billion yuan. In contrast, only 13 claims totaling 8947 ten thousand yuan were disclosed in the first three quarters of 2025. Insufficient sample data has led to a lack of pricing experience, making 'divergence between pricing and risk' a prominent issue." He recommends strengthening underwriting discipline on the承保 side through layered coverage and reinsurance to spread single risks, while also establishing a mandatory disclosure system for D&O insurance premiums, coverage amounts, and claim data to bring rates back to their risk-based foundations.
