China life premiums set to slow after 10.2% jump in 2025

Sales were lifted by demand ahead of insurers' pricing rate reductions last year.

China’s life insurance sector faces growing pressure from stock-market volatility and slower premium growth, which could lead to rising exposure to equities and expectations of weaker premium growth in 2026.

Fitch Ratings’ APAC Insurance Outlook 2026 said the recovery in capital markets supported stronger earnings in the first nine months of 2025. 

“The recovery in capital markets supported better earnings metrics in 9M25, though the solvency position weakened as surplus generation lagged the pace of capital consumption driven by heightened market risk,” the report said.

Fitch said insurers have been increasing investments in high-dividend equities whilst reducing exposure to alternative investments, making earnings more sensitive to stock-market movements and less predictable.

“We expect this trend to continue, on prolonged low long‑term yields and the adoption of IFRS 9in 2026, which allows long‑term equity investments to be classified under fair value through other comprehensive income, smoothing out earnings volatility,” it added.

Under the accounting standard, long-term equity investments can be classified under fair value through other comprehensive income, helping reduce earnings volatility.

The regulator introduced a dynamic pricing-rate adjustment mechanism in 2025 to keep new business pricing aligned with market interest rates. 

Fitch said this could pressure margins because costs linked to in-force business are declining more slowly.

“We expect mid-single-digit premium growth in 2026, following a 10.2% yoy increase in 9M25, driven by strong sales ahead of insurers’ pricing-rate reductions,” Fitch Ratings said.

Growth in 2025 was supported by strong sales ahead of insurers’ pricing-rate cuts.

Fitch said lower rates have narrowed the expected return gap between insurance savings products and banks’ wealth-management products, reducing the appeal of savings-type insurance products.

The agency also expects tighter commission rules and a continued decline in agent numbers to weigh on growth. 

However, bancassurance premium growth recovered in the first nine months of 2025 from a low base in 2024, with insurers expected to continue focusing on quality growth in the channel.

Fitch said solvency ratios are likely to remain under pressure because of higher insurance reserve provisions, falling interest rates and greater exposure to equities. 

Insurers with weaker solvency positions are expected to continue issuing subordinated or perpetual bonds to strengthen risk-based capital buffers.

The agency said insurers are likely to focus more on business quality and wider new business value margins through commission controls across agency and broker channels, alongside ongoing reductions in liability costs.

Fitch added that the rising share of participating products could reduce sensitivity to interest-rate movements and help limit negative spread risk, although these products generally contribute lower new business value than health and traditional life products under current actuarial assumptions.

The sector is also expected to reshape business models ahead of the full implementation of IFRS 17 in 2026, with insurers seeking to optimise contractual service margin accumulation.