China’s NFRA Introduces Stricter Insurance Product Regulations to Enhance Consumer Protection

BEIJING – July 10, 2025 – The National Financial Regulatory Administration (NFRA) of China has released the Measures for the Appropriateness Management of Financial Institutions’ Products, effective from February 1, 2026, to strengthen consumer protection and regulate the financial services sector.

For the insurance industry, the new rules mandate classified and tiered management of insurance products and establish a tiered sales qualification system for sales personnel. These measures aim to ensure that insurance products are sold appropriately based on customers’ needs, financial capacity, and risk tolerance, aligning with China’s broader goal of fostering a transparent and consumer-centric financial ecosystem.

National Financial Regulatory Administration (NFRA) 

Details of the New China Insurance Product Regulation

The NFRA’s policy introduces a comprehensive framework for managing insurance product sales, emphasizing consumer suitability and sales professionalism. Key provisions include:

• Classified and Tiered Product Management: Insurance products must be categorized and graded based on factors such as:

  • Product Type: Life, health, property, or annuity products.

  • Coverage Scope: Scope of protection, such as critical illness or accident coverage.

  • Policy Benefit Certainty: Whether benefits are guaranteed (e.g., fixed annuities) or non-guaranteed (e.g., participating policies).

  • Other Factors: Complexity, investment risk, and premium structure.

    
    

• Tiered Sales Qualification System: Insurers must establish a hierarchical system for sales personnel based on:

  • Insurance Knowledge: Proficiency in product features, risks, and regulations.

  • Compliance Record: History of adhering to regulatory and ethical standards.

  • Sales Experience: Track record of successful and responsible sales. Sales personnel will receive tiered authorizations, limiting them to selling products matching their qualification level, ensuring complex products are handled by experienced agents.

    
    

• Customer Suitability Assessment: Insurers must collect detailed information to match products to customers’ profiles, including:

  • Basic Information: Name, occupation, age, and contact details.

  • Insurance Needs: Demand for protection (e.g., health, life) and policy duration.

  • Existing Coverage: Details of similar loss-compensation products already purchased.

  • Financial Capacity: Income, assets, and ability to afford premiums.

  • Risk Tolerance: Risk appetite and capacity to bear potential losses.

  • Regulatory Requirements: Information mandated by laws, product rules, or contracts.

    
    

• Enhanced Oversight: The NFRA emphasizes stricter management of sales personnel, sales channels, and sales practices to prevent mis-selling, with a focus on digital platforms, bancassurance, and agent networks. Regular audits and compliance checks will ensure adherence.

The policy aligns with China’s Consumer Rights Protection Law and aims to address issues like mis-selling, which has led to 12,000 complaints annually to the NFRA from 2022–2024, particularly for complex investment-linked insurance products. By enforcing suitability and transparency, the NFRA seeks to boost consumer trust in a market where life insurance premiums reached CNY 3.2 trillion ($450 billion) in 2024, representing a 6.7% year-on-year growth.

Current Status of Sales Force in China’s Insurance Market

China’s insurance market relies heavily on its vast sales force, with approximately 7.5 million insurance agents as of 2024, though this number has declined from a peak of 9 million in 2019 due to regulatory tightening and digitalization.

The sales force is critical to the industry’s growth, contributing to CNY 5.1 trillion ($717 billion) in total premiums in 2024, with life and health insurance driving 70% of sales. Key trends and challenges include:

• Agent Demographics and Training: The majority of agents are employed by major insurers like China Life (1.2 million agents) and Ping An (0.9 million agents). Agents are increasingly required to hold certifications, with the NFRA mandating the Insurance Agent Qualification Exam for all new agents since 2023. Training programs are shifting toward digital platforms, with Ping An’s Smart Training System covering 80% of its agents in 2024.

  
  

• Digital Sales Growth: Digital channels, including mobile apps and WeChat mini-programs, accounted for 45% of life insurance sales in 2024, reducing reliance on traditional agents. However, complex products like universal life still require face-to-face sales, with 60% of such sales handled by senior agents.

  
  

• Mis-selling Concerns: Mis-selling complaints, particularly for investment-linked products, prompted 10,000 agent suspensions in 2024. The NFRA’s tiered qualification system aims to address this by restricting inexperienced agents from selling high-risk products.

  
  

• Attrition and Productivity: High agent turnover (average 30% annually) remains a challenge, driven by intense competition and performance pressure. Top insurers like Ping An report higher productivity, with agents generating CNY 1.2 million in premiums annually on average, compared to the industry average of CNY 0.8 million.

  
  

• Regulatory Impact: The C-ROSS Phase II regime and the new NFRA policy are pushing insurers to invest in agent training, with CNY 8 billion spent industry-wide in 2024 on compliance and education programs to prepare for the 2026 rules.

The shift toward a tiered sales system is expected to professionalize the workforce, reducing mis-selling and aligning sales practices with consumer needs. However, smaller insurers may struggle with training costs, potentially leading to further market consolidation.

The new China Insurance Product Regulation is expected to drive consolidation, with smaller insurers struggling to meet compliance costs, while major players like China Life and Ping An, with robust compliance frameworks, are well-positioned. The China Banking and Insurance Regulatory Commission (CBIRC) reported a 12% increase in insurer compliance investments in 2024, reflecting the sector’s adaptation to stricter rules.

Comparison of Major Chinese Insurance Companies

Below is a comparison of leading Chinese insurers based on financial performance, market position, and readiness for the NFRA’s new regulations, using 2024 data and market insights:

Metric	China Life	Ping An Insurance	PICC	CPIC
Total Premiums (2024, CNY)	650B	900B	680B	420B
Net Profit (2024, CNY)	110B	141B	24B	28B
Value of New Business (VNB)	60B	74B	18B	15B
Market Share (2024)	20.3%	17.6%	10.2%	8.5%
Digital Sales (% of Total)	45%	70%	30%	50%
Compliance Framework	Advanced (C-ROSS II compliant)	Advanced (AI-driven compliance)	Developing	Strong
Sales Force Size	1.2M agents	0.9M agents	0.5M agents	0.4M agents
Key Products	Whole life, health, annuities	Universal life, health, wealth	Property, casualty, life	Health, auto, life
Regulatory Readiness	High (dedicated compliance unit)	High (tech-driven audits)	Moderate (upgrading systems)	High (streamlined processes)

Analysis

• Market Leadership: Ping An leads in innovation, with 70% digital sales and AI-driven compliance, positioning it to adapt swiftly to the NFRA’s tiered sales system. China Life dominates in scale but lags in digitalization (45% digital sales). PICC and CPIC are strong in diversified portfolios but face challenges upgrading compliance systems.

• Financial Performance: Ping An’s CNY 141 billion net profit and CNY 74 billion VNB reflect its tech-driven efficiency, while China Life’s CNY 650 billion premiums underscore its market dominance. PICC’s lower CNY 24 billion profit reflects its focus on property and casualty, less affected by the new rules.

• Regulatory Readiness: China Life and Ping An have robust compliance frameworks, with dedicated units and C-ROSS II compliance, giving them an edge in implementing tiered product and sales systems. PICC’s moderate readiness may require investment in agent training, while CPIC’s streamlined processes ensure agility.

• Sales Force: China Life’s 1.2 million agents face challenges in meeting tiered qualification standards, while Ping An’s tech-driven training programs for its 0.9 million agents align well with the NFRA’s requirements.

Outlook and Implications

The NFRA’s policy, effective February 1, 2026, is poised to reshape China’s insurance landscape by reducing mis-selling and enhancing consumer trust. The tiered sales qualification system will likely increase training costs, with insurers spending an estimated CNY 10 billion industry-wide in 2026 to comply. Large insurers like Ping An and China Life are well-equipped, but smaller firms may face consolidation pressures, with the NFRA reporting a 5% decline in the number of insurers from 229 in 2023 to 218 in 2024.

The policy supports China’s broader financial reform goals, with the China Insurance Industry Association projecting a 7% annual premium growth through 2030. However, challenges include ensuring digital platforms comply with suitability assessments and managing high-net-worth clients’ demand for complex products. Posts on X highlight industry optimism but note concerns about compliance costs for smaller players.

Consult Everbright Actuarial Consulting for Expert Guidance

To navigate the complexities of the NFRA’s new regulations or optimize your insurance portfolio, contact Everbright Actuarial Consulting at info@ebactuary.com . Our team of actuaries and brokers offers tailored risk assessments, compliance strategies, and insights into China’s evolving insurance market. Reach out for personalized consultations, regulatory guidance, or educational resources to ensure your insurance solutions align with your financial goals.