Source: China Insurance Association
To further standardize product development practices among property and casualty insurers, protect the legitimate rights and interests of policyholders, insured persons, and beneficiaries, reinforce regulatory oversight, enhance the quality and efficiency of insurance product supply, and promote high-quality development in the property and casualty insurance sector, the National Financial Regulatory Administration has recently revised and issued the "Provisions on the Management of Product Development by Property and Casualty Insurance Companies" (hereinafter referred to as the "Provisions").
I. Background
In recent years, China's property insurance market has grown rapidly. While product coverage has expanded and protection offerings have become richer, several challenges remain: high proportions of riders lack detailed rules; industry standard clauses and the management/application of pure loss ratios need strengthening; and criteria for evaluating, revising, and cancelling company-specific products require further refinement.
The Financial Regulatory Administration has revised the original "Guidelines for Property and Casualty Insurance Product Development" and renamed it the "Regulations." This provides clear requirements and well-defined standards for product development in the industry, serving as a key initiative in property-casualty insurance regulation and comprehensive non-auto insurance governance, and as a critical tool for strengthening regulatory oversight.
II. Core Requirements for Standardizing Product Development and Protecting Consumer Rights
1. Uphold the essence of insurance
Clearly define that insurance product development must adhere to the principles of insurable interest, indemnity, utmost good faith, aleatory contracts, and risk-based pricing. Do not develop products that lack contingency elements, cover speculative risks, offer no actual coverage, are designed solely for malicious speculation, or violate public order and good morals.
2. Strengthen standards and specifications
Terms and conditions must be standardized and uniform. Personal clauses should be clear, concise, and easy to understand. Any provisions that exempt or limit the insurer's liability must be highlighted in a manner sufficient to draw the policyholder's attention, thereby safeguarding the consumer's right to informed consent.
3. Strict Accountability
Clarify product development management responsibilities at all organizational levels and require property and casualty insurers to establish an internal accountability mechanism to ensure prudent product development.
4. Strengthen ongoing supervision
Require insurers to assess product compliance and suitability, promptly adjust or discontinue products that are no longer suitable for sale, and strengthen end-to-end product management.
III. Special Chapter on the Management and Configuration of Supplemental Insurance Product Development
Riders supplement the main policy, enhancing flexibility while maintaining stability. They provide consumers with more comprehensive and targeted coverage. Riders must be closely related to the main policy, extending, reducing, or adjusting its scope.
In practice, some insurers have designed clauses with relatively independent substantive content or weak ties to the base policy as riders, and even used riders to amend errors in the base policy. To address this, the Regulations establish a dedicated chapter on riders, systematically defining their scope, development objectives, and requirements for necessity assessment, while also listing specific scenarios prohibited from rider development. The goal is to guide the industry back to the original intent of rider development, ensuring clear product structures, well-defined liabilities, and mitigating risks related to clause conflicts, claim disputes, and regulatory compliance.
4. Additional Requirements for Using Industry Model Clauses and Benchmark Pure Risk Loss Rates
Developing and using industry model clauses and benchmark pure risk loss rates are key measures to enhance the standardization, normalization, accuracy, and scientific rigor of industry policy terms.
The "Regulations" specify that property and casualty insurers shall, in principle, use industry model clauses or baseline pure risk loss rates where available. For companies not using them, a justification for the deviation must be provided in the feasibility or actuarial report. This approach respects insurers' differentiated business paths while strengthening the effectiveness of model clauses and pure risk loss rates through detailed requirements, ultimately promoting quality improvements across the industry's product portfolio.
5. Strengthen the primary responsibility of property and casualty insurers in product development management
The "Regulations" systematically reinforce the company's primary responsibility for product development management by addressing multiple dimensions, including organizational hierarchy, standards, processes, and accountability.
The company shall establish a Product Management Committee led by the senior executive to review major decisions regarding clause and rate development. High-innovation, unique business models, or high underwriting risk products must also be included in the review scope to ensure effective risk coverage.
Establish clear criteria for product evaluation, revision, and deregistration to refine annual product reporting requirements and drive continuous improvement of the end-to-end product management system. Clarify responsibilities of key personnel—including the company's principal executive officer, chief compliance officer, chief actuary, and product development managers at all levels—to strengthen product development oversight and ensure institutional accountability.
