Source: Financial Times
Reporter Dai Mengxi
In 2025, China's property and casualty insurance sector achieved a combined ratio of 98.6%, with underwriting profits exceeding 200 billion yuan—the best level in nearly 10 years. Non-auto insurance premiums rose to 46.4% of total premiums, reflecting continued optimization of the product mix. However, behind these impressive results, premium growth has slowed: from the high-growth pace of the "13th Five-Year Plan" period to an average annual compound growth rate of 5.3% during the "14th Five-Year Plan," further declining to 3.9% in 2025.
Experts note that China's insurance industry is shifting from scale-driven, extensive growth to value-focused, high-quality development. With sustained policy support, rising demand for economic and social risk protection, and deep AI empowerment, the sector must balance realistic foundations with the challenges ahead. Deepening collaboration between direct and reinsurance operations offers a practical path to address industry bottlenecks, seize new opportunities, and boost overall innovation and development.
2026 marks the opening year of the 15th Five-Year Plan. For China's property and casualty (P&C) insurance sector, this period represents a critical juncture in shifting development models. During the 14th Five-Year Plan, the P&C industry achieved steady growth while significantly improving quality and profitability. In 2025, the combined ratio stood at 98.6%, underwriting profits exceeded 200 billion yuan, reaching the best level in nearly 10 years; non-auto insurance premium share rose to 46.4%, with continued optimization of product mix. However, behind these strong results, premium growth has slowed: from high-speed expansion during the 13th Five-Year Plan to an annual compound growth rate of 5.3% in the 14th Five-Year Plan, further declining to 3.9% in 2025. The traditional path of scale-driven expansion is narrowing, and new avenues for value creation require deeper cultivation.
Wang Simiao, Chief Officer of the China Insurance Association, stated at the 2026 China Property Reinsurance Market Seminar that the insurance industry is shifting from scale-driven extensive growth to value-oriented high-quality development. With continued policy support, rising demand for economic and social risk protection, and deep integration of technologies like artificial intelligence, the industry must balance realistic foundations with emerging challenges. Strengthening collaboration between direct insurers and reinsurers is a practical pathway to address industry bottlenecks, seize new opportunities, and enhance overall innovation and development levels.
Switch growth logic from "scaling up" to "boosting efficiency"
During the 14th Five-Year Plan period, China's property and casualty (P&C) insurance industry underwent a profound structural transformation. Data disclosed by China Re Property Insurance shows that compared to 2020, P&C premiums in China grew by approximately 4000 billion yuan in 2025, with non-P&C products contributing over 70% of this growth. The share of non-P&C premiums has risen year over year, reaching 46.4% in 2025, an increase of 7 percentage points from 2020. From a product perspective, the structure continued to optimize: health insurance achieved double-digit growth for 5 consecutive years, with a compound annual growth rate exceeding 15%, while premium volume doubled compared to 2020, becoming the first non-P&C product category to exceed 2000 billion yuan in annual premiums. Agricultural insurance scale surpassed 1500 billion yuan and maintained underwriting profitability.
More noteworthy is the improvement in underwriting profitability. The industry's combined ratio shifted from a loss during the 13th Five-Year Plan period to an average of 99.6% in the 14th Five-Year Plan period, further optimizing to 98.6% in 2025. Underwriting profits exceeded 200 billion yuan, marking the best performance in nearly 10 years. Specifically, the expense ratio dropped from over 38% during the 13th Five-Year Plan to 26.5% in 2025, while the loss ratio rose to approximately 71%. These shifts in loss and expense ratios reflect the gradually unfolding impact of the "Report-Action Integration" regulatory policy, signaling a return of industry competition from expense-driven models to risk-based pricing.
However, structural concerns underlie the apparent profit improvement. Property and casualty insurers' underwriting profits rely entirely on auto insurance; non-auto lines have posted losses for years. By segment, commercial property and engineering insurance face intense price competition in most areas, with insufficient premium adequacy. Profit buffers in mild loss years are thin, while severe loss years lead to deep losses—even in 2025, a relatively mild catastrophe year, both segments recorded underwriting losses. Additionally, employer liability insurance accounts for nearly 40% of non-auto business and has accumulated losses close to 300 billion yuan, making it a major drag on overall non-auto performance.
Meanwhile, the external risk environment is intensifying operational pressure, driven by emerging changes in disaster, industry, social, and overseas risks. Research indicates that a super-El Niño event, potentially breaking historical intensity records, is forming, with its impacts expected to materialize next year. Beyond climate-related disasters, the sector faces multiple new risk challenges. For instance, domestic safety accidents are occurring frequently; the rise of computing centers and large model applications has introduced new threats such as cyberattacks; geopolitical tensions abroad persist, with escalating risks in the Middle East expanding exposure for shipping and energy insurance.
Zhu Xiaoyun, Deputy Secretary of the CPC China Re Board and President, stated that China is at a critical strategic juncture marked by the launch of the 15th Five-Year Plan and the deepening of high-quality development. Globally, a century-scale transformation is accelerating, with geopolitical conflicts and extreme climate risks compounding each other. As China cultivates and expands new quality productive forces—spurring rapid growth in emerging industries such as low-altitude economy and artificial intelligence—it faces both new risks and challenges, while also demanding higher standards for risk protection systems. Zhu believes that the next 10 years represent a pivotal strategic opportunity for the insurance and reinsurance industry to transform, upgrade, and achieve high-quality development. Direct insurers and reinsurers should better fulfill their roles as economic shock absorbers and social stabilizers, building a relationship based on shared risk responsibility.
Break through capability boundaries to build a collaborative relationship between direct and reinsurance.
Facing persistent underwriting losses in non-auto insurance, challenges in pricing emerging risks, and the accumulation of catastrophe risks, direct insurers alone cannot break through these constraints. Wang Simiao noted that direct insurers and reinsurers are the two pillars of the insurance market—complementary functions with mutual dependence. Direct insurers are closer to the market and customers, offering rich scenarios, channels, and data resources. Reinsurers bring strong professional expertise, risk modeling capabilities, and a global risk diversification network.
Data shows that during the 14th Five-Year Plan period, the overall ceded reinsurance ratio in the property and casualty insurance industry rose above 10%, with non-auto business maintained above 25%. Ceded premiums accounted for more than 80% of total ceded premiums, as an increasing number of direct insurers leveraged reinsurance to manage risk exposure from high-risk and innovative business lines.
However, industry insiders note that current direct-reinsurance partnerships remain largely focused on risk transfer. Joint product development, shared risk modeling, and collaborative risk reduction efforts are still in their early stages. Emerging sectors such as the low-altitude economy, commercial spaceflight, and computing power centers face common challenges: insufficient data samples and unclear risk characteristics. No single insurer can achieve precise pricing alone; direct and reinsurance players must therefore bridge capability gaps through closer collaboration.
Industry-wide initiatives are paving the way for deeper collaboration. Wang Simiao revealed that the Insurance Association of China is currently exploring the establishment of a Property Reinsurance Joint Conference mechanism under the Non-Life Insurance Committee to strengthen communication and cooperation among property reinsurers. In her view, leveraging big data and artificial intelligence while safeguarding trade secrets and customer privacy in compliance with regulations, will enable data flow. This will allow insurers and reinsurers to jointly build more accurate risk models, smarter risk control tools, and more efficient service platforms—a critical step toward evolving from business cooperation to integrated capabilities.
Zhu Xiaoyun believes that as AI technologies centered on big data, large models, and high-performance computing rapidly evolve, the insurance industry is undergoing a profound shift from capital-intensive to technology-intensive. "Direct insurers are closest to the front lines and detect risks earliest; reinsurers operate behind the scenes with deep expertise and extensive experience. However, emerging sectors lack sufficient data accumulation, and traditional pricing models struggle to adapt—precisely the fertile ground for collaboration between direct and reinsurance companies."
Building on this, reinsurers with inherent international attributes should take the lead in safeguarding direct insurers' global expansion. Direct and reinsurance sectors must collaborate to advance high-level opening-up, support initiatives like the Belt and Road, promote shipping development, and foster a value-driven partnership between direct and reinsurance companies.
Seize new opportunities and anchor national strategy to unlock growth potential
Looking ahead to the 15th Five-Year Plan period, national industrial, infrastructure, and regional development plans are unlocking significant growth opportunities for property insurance. According to China Re Property's forecast, the business scale of property insurers will surpass 2 trillion yuan during this period, with non-auto insurance reaching the trillion-yuan milestone. By the mid-to-late stage of the 15th Five-Year Plan, the share of non-auto insurance premiums is expected to exceed 50%. As comprehensive governance of non-auto insurance continues to take effect, the market is evolving toward standardization, specialization, and precision. The non-auto segment is poised to turn underwriting losses into profits, becoming a key contributor to high-quality industry development.
The 15th Five-Year Plan outlines the overarching framework for economic and social development over the next 5 years, presenting significant opportunities for the property and casualty insurance industry. Specifically in auto insurance, new energy vehicle (NEV) coverage remains a key growth driver. Emerging sub-segments include providing insurance services for NEVs going global and supporting the large-scale adoption of electric heavy-duty trucks. The widespread deployment of autonomous driving technology will significantly alter driving risks and shift liability frameworks on roads, introducing new factors to auto insurance operations. The scale and market share of NEV insurance are projected to double compared to the 2025 baseline.
The non-property and casualty insurance sector is also experiencing diversified growth. Key development directions for technology insurance include fostering innovation in niche products, reasonably expanding coverage scopes, aggregating underwriting capacity across the industry, and upgrading service models to support new quality productive forces. In terms of housing safety, property quality and safety insurance—integral to lifecycle management—is being incorporated into urban renewal plans and piloted in multiple regions. Catastrophe insurance has been assigned a critical role in emergency system planning, with several provinces and cities mandating pilot programs. Agricultural insurance premiums are projected to reach between 1800 billion and approximately 2000 billion yuan, while reinsurance, particularly commercial reinsurance, will play an increasingly diverse role in advancing high-quality agricultural insurance development.
Zhongguo Reinsurance Property & Casualty Insurance Company General Manager Wang Zhongyao stated that as we look toward the "15th Five-Year Plan" period, we must clearly recognize that under the unprecedented changes of our times, technological innovation and industrial transformation are advancing rapidly. With production, consumption, and trade evolving at an accelerated pace, these trends demand higher standards from the insurance industry's supply side. "The industry's role must shift from passive capital protection to active technical service," Wang said. "Its positioning needs to evolve from merely a risk backstop to a value creator embedded in national governance and serving economic development and people's livelihoods."
