"Sister Li, would you like to add more coverage to the product we insured last month? Fast-return products may face limited availability soon."
On 2026/10/12, Ms. Li received the aforementioned call from her bank relationship manager. In the second half of this year, a three-year time deposit of ¥20 was set to mature. At the manager's recommendation, she purchased a participating insurance product with a coverage term of 6 years; by the fourth year, its cash value exceeds the total premiums paid.
These products are now facing rectification. According to the Economic Observer, financial regulatory bureaus in multiple regions have recently instructed life insurers to investigate and rectify "quick-return" products. Specifically, the Shanghai Financial Regulatory Bureau issued a notice (hereinafter referred to as the "Notice") requiring local life insurers to generally refrain from filing new policies where the cash value at the end of the 3th policy year exceeds the total premiums paid. Existing policies with similar issues should be proactively discontinued. "Although our company does not offer three-year products with cash values exceeding paid premiums, so no discontinuation is required for rectification, the scale of such products during the 'Red Opening' campaign will be affected," said a manager at a branch of a major life insurer to the Economic Observer.
Disrupt the smooth start
In 2023 year 9 month, Ms. Li deposited 20 yuan in a three-year time deposit with an interest rate of 3.5%. Upon maturity, she received interest income of 21000 yuan. In 9 this year, the three-year time deposit rate dropped to 1.65%, half of what it was before. Under her relationship manager's recommendation, Ms. Li began exploring bank wealth management and insurance products, ultimately selecting Bao Ying Man Xin Whole Life Insurance (Participating).
Based on the illustration provided by Ms. Li, this product has a 3-year premium payment term and a coverage period of 6 years. By the fourth year after premiums end, the cash value will exceed the total premiums paid. With an annual premium of 10 ten thousand yuan, the cash value reaches 304600 yuan starting from the fourth year and grows to 315060 yuan at maturity in the sixth year.
At the time, the bank's relationship manager explained that based on a 100% dividend realization rate, if Ms. Li pays premiums for 3 years with a coverage period of 8 years, the expected annualized return would be 2.3%~2.5%. Including the fixed-term deposits for the subsequent 5 years, the overall yield could reach approximately 2.7%, significantly higher than the prevailing bank fixed deposit rates (1.55%~1.65%).
Ms. Li was intrigued by the sales representative's recommendation to add coverage. "These products resemble bank deposits with short terms and competitive yields," she said. News of tightening restrictions on "quick-return" policies first rattled not insurance consumers, but the insurers themselves.
Executives at regional branches of major life insurance companies stated that the announcement of the investigation and rectification will affect the sales momentum of "Kai Men Hong" products in the bancassurance channel, primarily by compressing the scale.
For sales professionals, insurance products with a 3-year payment term and maturity in 6 years resemble deposit products. Their simple product descriptions make them easier for consumers to accept during sales. For bank channel customers, these products serve as replacements for higher-interest deposit products that have previously matured.
Insurers' profits come from three main sources: mortality variance, expense variance, and investment variance. Simply put, they make money when actual claims are lower than expected, expenses are lower than planned, and investment returns exceed promised rates. Quick-return products have short terms, offer no protection coverage, are sold through banks, and carry high commissions—making it difficult to earn significant profits from mortality or expense variances.
From a spread perspective, insurers profit by investing long-term funds over long horizons. However, with shorter-duration liabilities, they are constrained to short-duration assets. In a declining interest rate environment, this limits the value contribution from spreads. If such products mature simultaneously and coincide with rising rates or weak capital markets, existing surrenders and new premium inflows may decline, potentially creating liquidity risks for insurers.
Standardize Continuously
Notably, the Notice also provides an exception for certain insurance companies.
Per the Notice, companies facing genuine liquidity constraints must comprehensively assess their liquidity gaps, develop a sound remediation plan, and coordinate with regulators. In line with the "expenditure based on revenue" principle, they must strictly control business scale and establish a deadline for suspending product sales pending rectification.
"This differentiated policy is essential. Our individual sales channel contributes very little; we rely mainly on the bank insurance channel. 'Pay 3, Get 6' quick-return products were the core drivers for our company's scale growth and strong start-of-year performance in recent years," said an industry professional from a mid-sized life insurer. "Now, new product filings are being blocked, and existing products must be discontinued. The pressure is immense."
According to a report by The Economic Observer, nearly 20 life insurance companies have failed to disclose their solvency reports on time.
This is not the first time regulators have taken action against this type of product.
In 2016 3, the former China Insurance Regulatory Commission (CIRC) issued the "Notice on Regulating Medium- and Short-Term Products," requiring the discontinuation of life insurance products with a duration of less than 1 years. According to the notice, medium- and short-term products are defined as life insurance policies where, in any of the first 4 policy years, the sum of the policy's cash value (account value) at the end of that year and accumulated survival benefits exceeds the total premiums paid, and over 60% of such policies are expected to have a duration of less than 5 years. The notice mandates that insurers strictly control the scale of these products, linking it to their capital contributions and net assets. At that time, the market for medium- and short-term products was dominated by universal life and investment-linked insurance products.
In 2019, due to the difficulty in offsetting short-term business gaps with long-term business from some life insurance companies, liquidity issues arose. Consequently, regulators conditionally allowed two-endowment insurance policies with terms ranging from 3 to 5 years. On 5 of 2025, the "Notice on Strengthening Supervision of Universal Life Insurance Products" officially came into effect. According to this notice, only products such as whole life insurance, endowment insurance, and annuity insurance may be designed as universal life products; all others are prohibited. The coverage period for universal life insurance must not be less than five years.
Whether it was the universal life insurance of the past or today's "three-invest, six-insure" participating policies, their primary sales channels remain banks. This means competition in bancassurance channels has intensified.
In recent years, the bancassurance channel has been dominated by mid-sized and small insurers. Typically, these companies struggle to build their own agent sales forces, making bancassurance a critical distribution channel. These products feature short terms and high returns, helping to rapidly scale business volume and ensure stable cash flow for insurance companies.
Following the implementation of "reporting and execution alignment" in bancassurance channels, value ratios have improved compared to previous periods, prompting a shift in how major life insurers view these channels. Additionally, with declining interest rates and the maturity of numerous high-yield deposits, leading insurance companies are intensifying efforts in bancassurance to attract customers to transfer their savings.
In response to market competition, the Notice states that to further strengthen insurers' primary responsibility for product management, shift their business philosophy, and prevent disorderly competition, insurers must strictly adhere to regulatory requirements. They should enhance the accuracy of actuarial assumptions regarding product expense ratios, surrender rates, and investment returns, abandon growth-driven impulses, and accelerate the transition from pursuing speed and scale to focusing on value and profitability.
In fact, strict regulation of the bancassurance channel has been ongoing. In 2026 year 3 month, the Personal Insurance Supervision Department of the National Financial Regulatory Administration officially issued the "Notice on Further Strengthening Expense Management in Bank Agency Channels" and released a supporting Q&A document titled "Q&A (I) on Matters Related to Expense Management in Bank Agency Channels." This regulatory combination has advanced the "integration of reporting and execution" reform in the bancassurance channel into a phase of refined, penetrative implementation.
