As China enters the Year of the Snake, the life insurance industry builds on its strong recovery from 2024. This article outlines the state of the life market in China and prospects ahead.
The net financial results of the life insurance market in China in 2024 was boosted by strong investment income, contributed in particular by a short-term surge in equity markets and a recovery in the bond market. These helped ease pressure on interest and expense margins.
On the liability side, soaring demand for incrementally funded whole life insurance contributed to a substantial increase in premium income and consequently, net profit.
In 2024, 60 unlisted life insurers posted a combined net profit of CNY24.7bn ($3.46bn), with some smaller players turning profitable for the first time. This is a huge turnaround from the combined net loss of CNY14.2bn in 2023 of 60 non-listed lifers.
With major insurers like China Life and New China forecasting significant earnings growth, the total net profit for the mainland Chinese life market for 2024 is expected to exceed CNY150bn, reported International Finance that analysed the financial results of the life sector.
Reflecting 2024 performance, the Table 1 presents the preliminary financial highlights of the top 10 unlisted life insurers, ranked by net profit.
Despite the gains reported for 2024, the industry continues to face growing challenges as low interest rates and market shifts render past strategies less effective, increasing uncertainty. While short-term prosperity has provided a boost, it has not altered the broader reality of deep structural changes and an ongoing transformation in the life insurance sector. The industry still faces risks from interest-rate spread losses and long-term pressures on liability-side growth.
To sum up, the key challenges ahead are:
Challenge 1: Falling interest rates on assumed rates
The continued decline in interest rates is a major challenge for the insurance industry, because it disrupts pricing, investments, and financial models. Multiple factors, including slowing economic growth, demographic shifts, and weaker demand, suggest a long-term downtrend.
Consequently, life insurers face the risk of increasing negative interest spreads, threatening their profitability. Asset-liability mismatches and solvency risks also intensify. Japan’s 1990s crisis, in which eight insurers collapsed due to negative spreads, underscores the peril. Navigating this cycle is a critical challenge for the industry today.
Challenge 2: Investment struggles and asset-liability mismatch pressure
Life insurers chalked up investment gains in 2024, but profits declined sharply due to falling interest rates and market volatility. While the market improved briefly, some insurers failed to capitalise on the opportunities.
In addition, growing capital pressures led insurers to sell large blocks of equity assets, increasing market fluctuations and destabilising returns. Lower investment yields have further eroded profits, solvency, and liability strategies – reducing savings product returns, increasing protection product costs, and lowering dividend payouts, weakening competitiveness.
With early 2025 stock market declines, investment pressures remain severe. Since 2022, persistently low ultra-long-term bond yields have fallen below assumed rates, worsening cash flow, profitability, and solvency risks.
Challenge 3: Workforce shift and customer evolution
There has been a significant workforce transformation in the life market, which now has fewer than 6m agents compared to the peak in 2019.
The ‘2024 China Insurance Intermediary Market White Paper’ states that there are less than 1m effective sales agents in the sector. Despite hiring 900,000 new agents, major insurers still face a net decline, signalling structural challenges.
For life insurers, a challenge bigger than a fast-reducing population is changing consumer behaviour. The traditional agent-driven model is losing effectiveness, making it essential for insurers to adapt to evolving customer expectations.
Challenge 4: Changing product mix & growth bottleneck
Annuities, critical illness plans, and whole life insurance led recent sales. Critical illness insurance now covers 200m people, and is believed to be nearing saturation, while whole life insurance has weakened due to falling assumed interest rates.
Since September 2024, insurers have been shifting their focus to participating insurance policies based on a “guaranteed + variable” model to balance risk and competitiveness. However, early 2025 data show slow adoption of such policies, indicating that insurers have to step up customisation.
Life insurers are grappling with regulatory changes. Regulators are introducing tiered agent reforms, including classifying products and agents, requiring products of different degrees of sophistication to be sold by agents with the appropriate qualifications.
While this improves professionalism, mid-to-low-tier agents face income declines, pushing insurers to revamp sales and training strategies. The transition requires time and adaptation—past shifts show it cannot be rushed.
Strategies
Despite the challenges, opportunities for reform and growth abound. These include:
Strategy 1: Unlocking growth through the latest ‘10 Guidelines’ for the modernisation of the life insurance industry
On 11 September 2024, the State Council issued the “National 10 Guidelines 3.0”, a key policy blueprint for the next decade. It follows earlier versions from 2006 and 2014, aiming to establish a high-quality development framework for the insurance industry by 2029 and reshape the sector by 2035.
The guidelines focus on strict supervision, risk prevention, and industry advancement, guiding life insurers to strengthen protection functions, service capabilities, and financial modernisation efforts.
The authorities have also identified five main themes – technology, green development, inclusiveness, pensions, and digital finance – offering new growth opportunities for the life insurance sector.
Strategy 2: Adhere to regulations, adopt a macro view, strategise and transform for sustainability
China’s financial supervision advanced with the establishment of the CBIRC in 2018 and its successor, the National Financial Regulatory Administration, in 2023. These changes align life insurers with economic goals, requiring adaptation in product design, sales, asset-liability management, and oversight. Insurers must adopt best practices, conduct stress tests, control costs, and move away from high-cost sales strategies.
To counter falling rates, insurers should refine pricing, product design, and risk spreads, strengthen spread management and improve management of insurance sales behaviour to protect consumers and modernise marketing.
The “Supervisory Rating Measures for Life Insurers”, effective in March 2025, introduces differentiated regulation, taking into account the risk profiles of insurers. The measures surround governance, solvency, and asset-liability matching,
Strategy 3: The customer-centric era: redefining life insurance’s ‘Golden Triangle’
The era of rapid mass sales in life insurance, where the focus was on volume, is over. The life insurance industry has been shifting toward tailored customer management. Competition will centre on enhancing customer value instead of premium volume or market share.
In placing customers at the core, the industry must reshape its operational ‘Golden Triangle’, balancing products, sales, and long-term engagement.
Strategy 4: Innovating life insurance for the longevity era
China’s aging population is reshaping life insurance, driving demand for health and retirement protection. This trend also strains social security, allowing room for insurers to step in with private insurance solutions.
Insurers must expand into commercial health insurance, long-term care, and private commercial pensions, leveraging healthcare reforms and the government’s “Healthy China” drive. They can enhance personal pension services and provide comprehensive financial solutions to seniors.
Furthermore, by developing retirement communities, rehab centres, and integrated healthcare services, insurers can build a connected insurance-elderly care ecosystem.
Taikang Insurance Group chairman Chen Dongsheng stressed, “Life insurance is about embracing aging and health, creating a model that integrates insurance with elder care.”
Strategy 5: Embracing technology for a smart, digital life insurance ecosystem
Advancements in AI, cloud computing, big data, and large models are reshaping life insurance in areas like underwriting, policy management, and claims processing. Tools like ChatGPT (text AI), Sora (AI video), AGI (general AI), and GAI (generative AI) are driving efficiency and innovation.
Insurers are also adopting AI and big data to improve customer insights, product design, training, analytics, and security. These technologies enhance service delivery and customer experience.
The next step is to strengthen tech governance, upgrade infrastructure, boost agility, and ensure data security, making digital intelligence a pillar of industry growth. A