The article noted that China’s insurance industry is facing multiple challenges. Several insurance executives have become ensnared in corruption probes, highlighting that executive corruption remains a key concern for the sector. Wang Bin became the first “tiger” of the year to come under investigation. Conviction rates for high-profile, publicly announced investigations such as this are typically 100%, and several other senior financial executives have previously faced severe punishment.
In the past, much of the rapid growth of China’s insurance industry was driven by high-risk, high-return investment products, rather than conventional policies such as life and health insurance. Some insurers used premiums from short-term policies to buy property and trophy assets overseas, leading to dangerous mismatches between assets and liabilities. Beginning in 2017, a whirlwind crackdown was launched under the direction of the central government. Regulatory oversight was strengthened, the regulatory framework was consolidated, and many high-risk investment products were banned in an effort to prevent systemic financial risks.
More stringent regulation has also constrained the growth of traditional insurance businesses. Products covering accidents, vehicle insurance, and health insurance were once booming segments of the industry, but growth slowed after new rules required insurers either to raise their loss ratios or lower their premiums. At the same time, frequent changes in product regulations have made long-term planning increasingly difficult.
In addition, the industry has experienced a significant exodus of sales agents. China Life has shed more than 1 million agents since 2018, with nearly half of the exodus taking place in 2020. Ping An lost approximately 700,000 agents between 2019 and September 2021. Overall, about 30% of salespeople have departed from the industry over the past three years.
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