Reporter: Lin Hanyao
Amidst the comprehensive rollout of non-auto insurance governance and the deepening implementation of "reporting and execution alignment" in the property insurance sector, product development and management rules for property insurers are undergoing a systematic overhaul—the first such update in nearly a decade.
On 10 9, the National Financial Regulatory Administration officially issued the "Provisions on the Management of Property Insurance Product Development" (hereinafter referred to as the "Provisions"). The Provisions shall take effect on 1 11, 2026. Simultaneously, the "Guidelines for Property Insurance Product Development" issued by the former China Banking and Insurance Regulatory Commission in 2016 and the "Urgent Notice of the China Banking and Insurance Regulatory Commission on Regulating Issues Concerning the Development and Sale of Property Insurance Products" issued in 2014 are hereby repealed.
The Provisions consist of 8 chapters and 41 articles, elevating regulatory guidance to binding rules to establish a full-process supervision loop covering product development, pricing, approval and filing, as well as withdrawal. The new rules explicitly list eight prohibited development scenarios and dedicate a chapter to supplementary insurance, while strengthening executive accountability to directly address industry-wide issues such as hype-driven marketing and homogenized competition.
Define eight categories of negative lists
The current Guidelines have been in effect for nearly a decade. While the property and casualty insurance market has expanded its product coverage, it has also accumulated significant issues.
Previously, some property insurance products frequently strayed from their core risk protection purpose. The market was once flooded with eye-catching "gimmick policies," where certain terms were reduced to mere traffic-generating tools. These products were developed into speculative schemes offering no real coverage.
Accordingly, the "Provisions" reiterate five core principles in the basic requirements for product development: insurable interest, indemnity, good faith, aleatory contract, and risk-based pricing.
At the same time, the new regulations clearly specify eight prohibited development scenarios, covering areas from insurable interest to pricing logic.
This includes scenarios where the insured lacks a legally recognized insurable interest, arrangements that cover speculative risks or provide substantive risk protection without charging premiums (resulting in pricing distortions), and products with no actual coverage that are designed solely for malicious speculation. Additionally, products promising premium refunds if no claims occur are also prohibited.
To protect the legal rights and interests of insurance consumers, the "Regulations" set clear requirements for individual policy terms. Such terms must be expressed in plain, standardized, and unambiguous language to eliminate jargon barriers that make them difficult to understand.
To address the long-standing issue of hidden exemption clauses that have plagued consumers, the Provisions mandate that insurers must use text, fonts, symbols, or other prominent indicators sufficient to draw the policyholder's attention.
A senior official from the National Financial Regulatory Administration stated that the "Provisions" will consistently strengthen product oversight, standardize development management, and protect consumer rights. Insurance products that lack insurability, cover speculative risks, provide no actual coverage, are designed solely for malicious speculation, or violate public order and good morals are prohibited. Additionally, any clauses that exempt or limit the insurer's liability must be highlighted in a manner sufficient to draw the policyholder's attention, thereby effectively safeguarding consumers' right to know.
Targeted coverage to close loopholes for arbitrage in the supplementary insurance rider
While establishing the red lines, the "Provisions" for the first time include a dedicated chapter regulating supplementary insurance, marking a key highlight of this regulatory overhaul.
In practice, some companies have designed clauses that are substantively independent or weakly related to the main policy as riders, and even used riders to correct errors in the main policy.
To address these pain points, the Regulation introduces a dedicated chapter on supplementary insurance for the first time in industry oversight. It systematically defines the term, clarifies its development purpose and mandatory necessity assessment requirements, and lists specific scenarios where development is prohibited.
Article 16 of the "Provisions" explicitly lists four categories of additional insurance scenarios that are generally prohibited from development.
First, unless it is an extension or limitation of the scope of the policyholder or insured that differs from the main insurance policy.
Second, correct the error in the main policy.
Third, the clause framework is comprehensive and the insurance coverage is independent; therefore, it should be developed as a primary policy.
Fourth, those with weak correlation to the main insurance coverage.
A senior official from the relevant department of the National Financial Regulatory Administration stated that riders serve as supplements to basic policies, aiming to maintain the stability of the core coverage while appropriately enhancing its flexibility. This approach provides insurance consumers with more comprehensive and targeted protection. Riders should be closely linked to the basic policy, extending, reducing, or adjusting its related content.
The official stated that establishing a dedicated chapter for the development and management of riders aims to guide the industry back to the original intent of rider development, ensure clear product structures and defined liabilities, and prevent clause conflicts, claims disputes, or compliance risks.
Additionally, the naming, attributes, and pricing rules for supplementary coverage are also subject to standardization constraints.
For example, new regulations stipulate that additional insurance coverage should primarily be categorized according to its core coverage responsibilities. Premium pricing must clearly define base rates and floating rules, and is strictly prohibited from disrupting the market through ambiguous proportional relationships.
Exit mechanism further clarified
After clarifying the boundaries of product development, the Regulation extends regulatory oversight to insurers' internal governance structures.
In the past, some property and casualty insurers were prone to prioritizing reporting over management. Many products remained unmonitored by risk control systems after approval or filing, only being adjusted reactively when faced with mass complaints or regulatory penalties.
The Regulation breaks this management disconnect by requiring insurers to systematically assume full responsibility for product development and management across multiple dimensions, including corporate-level oversight, standards, processes, and accountability. Insurers must establish a Product Management Committee led by their top executive to deliberate on major matters related to the development and management of policy terms and rates.
Regarding the division of responsibilities, the "Regulations" establish a clear chain of accountability.
The head of a property and casualty (P&C) insurance company bears leadership responsibility for the development and management of its policy terms and rates. The Chief Compliance Officer holds direct responsibility for reviewing policy terms, while the Chief Actuary is directly responsible for reviewing rates. The head of the P&C insurer's department overseeing terms and rates development manages the centralized oversight of this work directly. Heads of product development departments or business units performing product development functions are directly responsible for terms and rates development within their respective product or business lines.
The dynamic assessment and exit mechanisms for products have been further strengthened.
Insurers must assess products launched within the past two years at least every six months and those launched more than two years ago at least annually. For in-force products accounting for 5% or more of current premiums, adequacy assessments must be conducted at least annually.
Promptly validate, revise, or cancel clauses and rates that have not been used for three consecutive years and are not industry demonstrations. For such clauses and rates requiring cancellation, property insurance companies must update their status on the industry platform designated by the National Financial Regulatory Administration within 10 days after cancellation.
