BY YANG XIAOHAN
According to the official website of the National Financial Regulatory Administration (NFRA) on 10 9, the NFRA recently revised and released the "Provisions on the Management of Insurance Product Development by Property Insurance Companies" (hereinafter referred to as the "Provisions"). This move aims to further standardize insurance product development practices, protect the legitimate rights and interests of policyholders, insured persons, and beneficiaries, signal a continued commitment to strong regulation, enhance the quality and efficiency of insurance product supply, and promote high-quality development in the property insurance sector.
Experts interviewed stated that the issuance of the "Regulations" guides non-property and liability insurance businesses back to their core protective function, effectively safeguards consumers' right to know, and will promote high-quality industry development.
A spokesperson from the National Financial Regulatory Administration stated that in recent years, as China's property insurance market has grown rapidly, insurance products have expanded their coverage and enriched their protection. However, issues remain: supplementary products account for a high share but lack detailed rules; management and application of industry model clauses and pure risk loss rates need strengthening; and standards for evaluating, revising, and deregistering company-specific products require further refinement.
Specifically, the "Provisions" consist of 8 chapters and 41 articles, covering general provisions, basic requirements for product development, requirements for main insurance clauses and rates, requirements for rider clauses and rates, product development management requirements, evaluation, revision, and deregistration, supervision and administration, and supplementary provisions.
To standardize product development and protect consumer rights, the "Provisions" propose: First, adhere to the core principles of insurance. It clarifies that developing insurance products must follow principles such as insurable interest, indemnity, and risk-based pricing. The development of insurance products is prohibited if they lack contingency, cover speculative risks, offer no actual coverage, are designed solely for malicious speculation, or violate public order and good morals.
Second, strengthen standards and regulations. Clauses must be expressed in a standardized manner. Personal clauses should be clear and easy to understand. Provisions that exempt or limit the insurer's liability must be highlighted in a way that draws the policyholder's attention, thereby effectively safeguarding consumers' right to know.
Third, strictly manage responsibilities.
Fourth, strengthen ongoing supervision.
The Provisions also include a dedicated chapter to regulate the development and management of additional coverage.
"Supplementary coverage complements the main policy, aiming to maintain its stability while enhancing flexibility to provide consumers with more comprehensive and targeted protection," said the official. Supplementary coverage should be closely linked to the main policy, extending, reducing, or adjusting its relevant terms. In practice, some companies have improperly designed clauses that are substantially independent or weakly related to the main policy as supplementary coverage, or even used supplementary coverage to correct errors in the main policy.
To this end, the Regulation establishes a dedicated chapter for riders, systematically clarifying their definitions, development objectives, and requirements for necessity assessments, while also specifying prohibited development scenarios. For example, Article 15 of the Regulation states that riders shall extend, restrict, or adjust coverage for policyholders, insured parties, or insured objects under the base policy. Property and casualty insurers must conduct necessity assessments before developing riders.
The Provisions impose further requirements on the use of industry model clauses and benchmark pure risk loss rates. Specifically, companies are expected to adopt these model clauses or rates where available. For any company that does not use them, a justification for the deviation must be provided in the feasibility report or actuarial report.
To strengthen accountability, the Provisions require companies to establish a Product Management Committee led by the primary person in charge to review major matters related to clause and rate development and management. It also mandates that products with strong innovation, special business models, or high underwriting risks be included in the review scope.
Regarding the impact of the "Provisions," Long Ge, Deputy Director of the Center for Innovation and Risk Management at the University of International Business and Economics, told the Securities Daily that their implementation will shift the industry from competing on fees and stacking add-on coverage to competing on policy design, actuarial capabilities, and compliance management. By strengthening full product lifecycle management and dynamic cleanup mechanisms, the Provisions aim to curb product homogenization and vicious fee competition, guide non-auto insurance and liability insurance businesses back to their core protection functions, and promote high-quality industry development.
According to Longge, for consumers, the "Regulations" require that personal insurance clauses be easy to understand and that exclusions or liability limitations be clearly highlighted, ensuring consumers' right to know. By strictly addressing pain points such as unclear positioning of附加险 (supplementary coverage) and hidden modifications in special agreements, the regulations will effectively reduce claims disputes and sales misconduct, enabling consumers to purchase genuine protection rather than products packaged with misleading sales tactics.
