Lin Hanyao, reporter at 21 Century Economic News
A two-year transformation of participating insurance products is entering the institutional refinement phase.
Recently, the China Insurance Association (hereinafter referred to as "the Association") released three draft regulations for public consultation: "Model Clauses for Whole Life Insurance (Participating)", "Model Clauses for Endowment Insurance (Participating)", and "Model Clauses for Annuity Insurance (Participating)". This initiative aims to establish a unified industry standard covering product design, contract terms, and sales practices.
Meanwhile, semiannual reports from listed insurers show that participating insurance products are gaining strong momentum in the incremental market. For several top insurers, participating policies now account for over 50% of new business, with some companies reaching more than 90% of their first-year premium business.
Furthermore, data from the China Insurance Association shows that for the industry as a whole, original insurance premium income from participating policies in the first half of the year exceeded 1 trillion yuan, representing a significant year-over-year increase of 94.4%, far surpassing the average growth rate of approximately 3.00% across the insurance sector, the life insurance market, and the property insurance market.
Multiple industry insiders told 21 that in the context of declining macro interest rate benchmarks and scarce high-quality assets, the transformation of participating life insurance is the result of the life insurance sector proactively restructuring liability costs and reshaping its asset-liability management logic.
For consumers, future life insurance products will increasingly shift from "high guaranteed returns" to "low guarantees plus floating dividends," changing how the value of insurance products is evaluated.
Participating policies become the absolute core of new business for listed insurers
The core business data disclosed in the 2026 half-year performance report clearly demonstrates the rapid momentum of the dividend insurance transformation.
The semiannual report shows that in the first half of 2026, New China Life's original insurance premium income from participating insurance policies grew by 165.4% year over year. PICC Life recorded 242.35 billion yuan in original insurance premium income from participating life insurance, a 112.3% increase year over year. Ping An Life's scale premium for participating insurance reached 1215.49 billion yuan, up 143.49% year over year. China Pacific Insurance's scale premium for participating insurance totaled 656.87 billion yuan, representing a 76.11% year-over-year growth.
The share of new premiums from participating insurance products further highlights the transformation resolve of leading insurers.
In the first half of the year, New China Life's long-term annual premiums for participating insurance products reached RMB 345.02 billion, a significant increase of 645.7% from RMB 46.27 billion in the same period last year. This accounted for over 90% of total long-term annual premiums. For Ping An Life, participating insurance products also contributed more than 90% to the overall annual premium income (excluding universal life insurance).
The acceleration by listed life insurers in shifting dividend-linked products is not coincidental, but a necessary response to the long-term downward trend in interest rates and a strategic move to mitigate "interest rate spread loss" risks.
"Interest rate risk is the most prominent and far-reaching core risk in life insurance operations," said Guan Ling, Chief Financial Officer of Fude Insurance Holdings Co., Ltd. and Interim Actuary of Fude Life Insurance. As long-term interest rates continue to decline, yields on long-term government bonds have fallen below the assumed interest rates for life insurance products, leading to growing and increasingly visible negative spread risks.
China Merchants Securities notes that under the combined effects of prudent policy direction, declining market interest rates, and dynamic pricing adjustments, the insurance supply side is undergoing transformation. Participating policies with flexible return mechanisms are emerging as a key focus for savings products. Their relatively lower guaranteed interest rates and dividend smoothing mechanisms effectively reduce insurers' rigid liability costs while fostering positive client engagement through potential floating returns.
Furthermore, in response to the prolonged low-interest-rate environment, Guan Ling further recommended that the industry lower the guaranteed interest rates on dividend products and shift toward a "low guarantee, high floating" dividend model.
He explained that while some companies in the market have already launched participating products with guaranteed interest rates of 1.25%, the 1.75% rate remains the current industry standard. Relying solely on individual insurers to adjust is insufficient to shift the broader industry trend. Unified regulatory rules are needed to coordinate efforts in reducing rigid guaranteed costs for participating products, optimizing insurers' liability structures, and enhancing long-term interest rate risk management capabilities.
Higher dividend realization rates are not always better.
In fact, it's not just the above life insurers ramping up participation in participating policies; from a product supply perspective, participating policies are becoming the core offering across the entire industry.
According to data released by the China Association of Insurance, as of 28 9, there are currently 801 life insurance products on sale from life insurers, including 513 participating policies (accounting for 64.04%). Additionally, 710 annuity products are available, with 445 being participating types (representing 62.68%).
As previously noted, dividend insurance premiums written in the first half reached 10126 billion yuan, up 94.4% year over year. In contrast, growth across the broader insurance sector, life insurance market, and property & casualty market all hovered around 3.00%.
As participating insurance products accelerate their transition into consumer-facing "core offerings," the sector faces its most critical market test.
As participating insurance products expand across the retail market, competition over dividend performance claims has intensified. In some sales scenarios, practitioners still habitually emphasize "historical dividend realization rates exceeding 100%", attempting to leverage past performance data to shape customer expectations of returns.
However, focusing solely on the dividend realization rate can lead to statistical pitfalls.
"The dividend realization rate is essentially a relative metric representing the ratio of actual dividends paid to the promised amounts in the illustration," said a life insurance company CEO. It depends on both the "numerator"—the actual amount distributed—and the "denominator"—the amount demonstrated at the time.
He explained that if a product's original demonstration rate was high, the same actual dividend level would result in a lower realization rate; conversely, lowering the demonstration rate artificially inflates the realization rate. Therefore, much of the industry's current "high realization rates" are merely calculation effects driven by reduced demonstration rates, which can be misleading. Without standardized communication, customers may mistakenly believe "the higher, the better."
Focus more on actual dividend levels
Sales-side promotional impulses and information asymmetry have not only deepened consumer confusion but also made preventing sales misrepresentation an unavoidable challenge in this asset-liability transformation. In response, regulatory frameworks are stepping in to address these issues.
The China Insurance Association recently released three draft proposals for public consultation: the Model Clauses for Whole Life Insurance (Participating), the Model Clauses for Endowment Insurance (Participating), and the Model Clauses for Annuity Insurance (Participating). These drafts aim to enhance the scientific rigor and accessibility of participating insurance terms, standardize sales practices and information disclosure, and safeguard the legitimate rights and interests of policyholders.
The three model clauses standardize core terms directly related to dividend rights—such as "Sum Insured," "Policy Dividend," and "Cash Value"—and integrate dividend explanations into each provision.
For example, the policy dividend section specifies the source of dividends, allocation methods, accumulation with interest, premium offset, paid-up additions, annual dividends, and final dividends. Standardizing key information helps consumers understand how dividends work and improves transparency.
Compared to traditional life insurance, the key feature of participating policies is their earnings structure: returns consist of both a guaranteed interest rate and a non-guaranteed interest rate.
The guaranteed interest rate is the rate set during product pricing for participating insurance policies (i.e., the assumed interest rate), representing the minimum return provided by the insurer to policyholders. The non-guaranteed portion consists of dividends, which depend on the performance of the insurer's participating fund account.
Participating policies offer lower guaranteed benefits. A portion of the insurer's operating surplus is distributed to policyholders as dividends. Therefore, actual future returns depend closely on the insurer's investment performance, asset allocation strategy, and risk management capabilities.
The general manager of the above life insurance company recommends evaluating participating insurance products based on their actual dividend performance—specifically, the real yield delivered to policyholders over a given period. This metric more accurately reflects customers' true sense of value.
He also noted that consumers should pay attention to insurers' long-term performance. He revealed that some companies artificially inflate their realization rates in the short term to promote new products.
However, long-term sustainability depends on its investment capabilities, risk management, capital strength, and the size of the special dividend reserve account.
