Source: Beijing Business Today
On 10 month 12 day, Beijing Business Today reported that regulators recently issued a notice titled "Notice on Conducting Investigations and Rectifications of 'Quick Return' Products" (hereinafter referred to as the "Notice") to personal insurance companies.
The "Notice" states that during recent product regulatory reviews, it was found that certain insurers offering "quick-return" products—such as ordinary and participating endowment insurance with payment periods of 3 years and coverage periods of 6 years via bank insurance channels—are deliberately underestimating actuarial expense assumptions. These products feature short cash value return periods and are being used to inflate scale, creating a risk of treating long-term policies as short-term. To further strengthen insurers' primary responsibility for product management, genuinely shift their business philosophy, establish sound perspectives on operations, performance, and risk, and prevent disorderly competition.
The Notice requires all companies to elevate their political stance, fulfill their primary responsibilities, and strictly adhere to regulations such as the "Notice on Strengthening the Management of Actuarial Assumptions for Personal Insurance Companies." They must enhance the integrity management of key actuarial assumptions—including product expense rates, mortality rates, lapse rates, and investment return rates. Companies should move away from growth-driven impulses and prioritize value and profitability over speed and scale.
The Notice states that, in principle, companies shall not file new products where the cash value at the end of policy year 3 exceeds the premiums paid. For existing filed products with similar issues, companies should proactively discontinue sales. Companies facing liquidity difficulties must comprehensively assess their liquidity gaps, develop appropriate cleanup and rectification plans, and communicate with regulatory authorities. In line with the "expenditure-based funding" principle, they must strictly control business scale and set a deadline for product discontinuation and rectification.
The notice states that all companies must conduct thorough product self-inspections and strictly implement the "integration of reporting and operations" requirements. Key areas for review include the scientific validity and reasonableness of actuarial assumptions for existing products, such as surrender rates and expense ratios. Companies must also fully assess cash flow pressures under scenarios involving bidirectional interest rate fluctuations. For firms that blindly pursue scale growth and trigger vicious market competition, regulators will enforce measures in accordance with the law—including supervisory interviews, orders to rectify, suspension of product filings, and administrative penalties—to safeguard a fair competitive market environment.
