How can China's insurers protect profits in a slowing market?
Weak consumer demand and the property downturn continue to weigh on China's economy.
China's non-life insurance sector is shifting its focus from growth to profitability as premium growth slows and insurers close branches, move operations online, and seek fresh business opportunities.
“The insurance industry is scaling back its physical footprint, with thousands of local brick-and-mortar branches exiting the market in recent years, driven by a rapid pivot toward digital operations, cost-cutting, and a shrinking traditional agent workforce,” AM Best Company, Inc. said in a September report.
The rating company expects the sector to remain stable in the medium term, supported by tighter regulation, opportunities tied to China's latest five-year plan, and growing insurance demand from Chinese companies expanding overseas.
AM Best said insurers are prioritising profitability and cost control over premium growth. It said weak consumer demand and the property downturn continue to weigh on China's economy, whilst exports of solar equipment, electric-vehicle batteries, and artificial-intelligence hardware have provided support.
Growth across China's insurance market has slowed but remains ahead of many developed markets.
Allianz Research said total premium growth eased to 7.4% in 2025, more than three percentage points below its long-term average.
China still increased its share of global insurance premiums to 10.9% in 2025 from 7.5% a decade earlier, with premium income reaching $867b (€746b).
“China has emerged as a clear No. 2, increasing its market share from 7.5% to 10.9%,” Allianz Research said.
Property and casualty insurance, which broadly corresponds to the nonlife segment, has grown more slowly. Premiums rose 2.6% in 2025, compared with an average annual growth rate of 6.6% over the previous decade.
Allianz Research estimated 2025 premium income at $222b (€190.9b) for property and casualty insurance, $503.3b (€433.2b) for life insurance, and $141.2b (€121.5b) for health insurance. Life insurance premiums grew 11.4%, whilst health insurance growth slowed to 2%.
China has more than 80 nonlife insurers, although the three biggest companies continue to dominate the market.
AM Best said thousands of branches have closed in recent years as insurers cut costs and expand digital operations.
China's share of global insurance premiums is forecast to rise further to 13.4% by 2036. North America is expected to remain the biggest market, however, accounting for about 46% of global premiums.
Questions to ponder:
- Will digital operations offset slower premium growth and support profits?
- Can nonlife insurers find growth through overseas Chinese businesses?
- How much market share can China gain from global insurance leaders over the next decade?
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EXPERT OPINION
China’s non-life insurers are increasingly prioritising strict underwriting discipline over relying on investment returns to support sustainable earnings. This was consistent with the recent draft revision of China’s Insurance Law unveiled by the local regulator, National Financial Regulatory Administration (NFRA), which reinforces the importance of prudential management and sustainable profit-oriented growth.
A core lever for better underwriting quality is rate adequacy. For instance, the non-life industry has benefited from improved claims experience in new energy vehicle insurance, owing to the combined result of better pricing accuracy derived from richer telematics, enhanced claims data and more granular pricing models, and tighter claims control. We also expect improved underwriting discipline in non-motor lines — especially property and liability, following the extended coverage of the “Filing-Execution Consistency” framework to non-motor lines by the NFRA in late 2025.
Underwriting margin depends on operational efficiency and expense control. To boost overall operating efficiency, some insurers are reducing their physical networks to accelerate digital distribution and lower customer acquisition costs. Meanwhile, many Chinese non-life insurers are integrating artificial intelligence across their operations, leveraging the availability of cost-effective AI solutions in the domestic market.
Additionally, Chinese non-life insurers face immense exposure to natural catastrophe risks. With extreme weather events becoming more frequent, it is critical for non-life insurers to enhance their climate risk management. In addition to traditional reinsurance support, they are increasingly adopting proactive risk reduction measures to better manage exposures, while elevating client experience and improving post-disaster response.