National Financial Regulatory Administration: Insurance companies should establish a commission compensation recourse mechanism for economic losses caused by the illegal and irregular actions of insurance sales personnel

According to the Zhitong Finance APP, the National Financial Regulatory Administration has issued a notice on promoting the deepening of the personal marketing system reform in the life insurance industry. The notice mentions that insurance companies should strengthen compliance management and risk monitoring in areas such as personal marketing system design, product development, behavior control, and expense management, effectively identify abnormal sales behaviors and sales arbitrage risks, provide timely warnings and interventions, and protect the legitimate rights and interests of insurance consumers. A mechanism for reclaiming commissions and salaries due to economic losses caused by illegal activities of insurance sales personnel should be established to effectively prevent operational risks.

At the same time, insurance companies should calculate the overall commissions based on established commission policies, expense budgets, and assessment mechanisms. They should establish commission incentive designs and deferred payment mechanisms that align with product design and expense structure, as well as match business quality and service quality. For policies with a payment period of 5 years (inclusive) to 10 years, the commission payment period should not be less than 3 years; for policies with a payment period of 10 years or more, the commission payment period should not be less than 5 years. This aims to guide insurance sales personnel to retain long-term and continuously provide good service to customers. For different types of insurance sales personnel, insurance companies should establish a balanced and reasonable commission incentive distribution mechanism to effectively safeguard the legitimate rights and interests of insurance sales personnel.

The original text is as follows:

National Financial Regulatory Administration

Notice on Promoting the Deepening of the Personal Marketing System Reform in the Life Insurance Industry

Jin Gui [2025] No. 13

To all financial regulatory bureaus, insurance industry associations, and life insurance companies:

In order to implement the spirit of the "State Council's Opinions on Strengthening Regulation, Preventing Risks, and Promoting High-Quality Development of the Insurance Industry," and to promote the establishment of a marketing system in the life insurance industry that is scientifically managed, fairly distributed in benefits, and effectively incentivized, cultivate a high-quality team of insurance sales talents who adhere to the concept of integrity, strengthen compliance awareness, understand customer needs, possess professional knowledge, and provide high-quality services, and promote the high-quality development of the life insurance industry, the following matters are notified:

1. The insurance sales personnel referred to in this notice include agency insurance sales consultants and employee insurance sales consultants. Agency insurance sales consultants are those who sign a commissioned agency contract with an insurance company and engage in insurance agency business. Employee insurance sales consultants are those who sign a labor contract with an insurance company and are specifically engaged in insurance sales.

2. Strengthen the main responsibility of insurance companies. Insurance companies should effectively assume the main responsibility for the compliance management and risk management of insurance sales personnel. The board of directors bears the ultimate decision-making responsibility for the development strategy, business strategy, and major planning of the personal marketing system; the management of the head office bears the main responsibility for the mechanism construction, decision-making execution, and risk management of the personal marketing system; various branches and management personnel at all levels bear the daily management responsibility of insurance sales personnel according to the authorization of the head office. Insurance companies shall legally bear the responsibility for the sales behaviors of the insurance sales personnel they entrust.

3. Enhance the professionalism of insurance sales personnel. Insurance companies should continuously strengthen the full-process management of insurance sales personnel, improve and perfect the system of recruiting and selecting insurance sales personnel, job training, sales authorization, behavior control, assessment and evaluation, incentive constraints, and file management, enhance the compliance awareness, professional level, and service capability of insurance sales personnel, and improve customer satisfaction Carry out the registration and management of the integrity information of insurance sales personnel in accordance with laws and regulations, ensuring that the procedures are standardized and rigorous, and the content is true and accurate, without concealing or falsifying integrity records.

IV. Guide the professional development of insurance sales personnel. Insurance companies should optimize the management mechanism of agency insurance sales consultants, gradually building an organizational structure, promotion system, and commission compensation incentive system that supports the long-term service of insurance sales consultants. For insurance sales consultants who belong to marketing teams or participate in the management and development of marketing teams, the sales team hierarchy should be streamlined and optimized, and commission incentives should be distributed scientifically and reasonably. Different incentive policies should be implemented based on the marketing and team management functions undertaken, promoting the sales benefits to tilt towards direct insurance sales consultants. For independent individual insurance agents who independently carry out insurance sales activities, a long-term sustainable commission compensation incentive system should be established, strengthening cost and risk control, and eliminating hierarchical interests.

V. Support company employees in voluntarily converting to insurance sales personnel in accordance with the law. Under the premise of legal compliance and fairness, employees who have signed labor contracts can negotiate with the insurance company to explore conversion to employee-based or agency-based insurance sales consultants. After obtaining the corresponding sales qualifications and being included in the management of insurance sales consultants, company employees can sell corresponding insurance products based on the authorization of the insurance company and their sales capability grading. Insurance companies should establish and improve the management system for the conversion of insurance sales consultants to prevent potential conflicts of interest and moral hazards, ensuring compliance of personnel behavior before and after the conversion, effective risk management, and smooth internal operations.

VI. Deepen the implementation of "reporting and execution in one." Insurance companies should prudently, reasonably, and differentially determine the cost assumptions of personal agency channel products based on product types, sales difficulty and complexity, and business development direction. Improve the cost-sharing mechanism, strengthen the overall planning between total costs and various types of costs, and clarify the total cost level and cost structure. Strengthen the management of cost allocation and measurement, ensuring that the allocation of costs in each period is reasonable and accurately measured. Reinforce the rigid constraints of budget execution assessment, strengthen the retrospective analysis of cost assumptions, and achieve the unification of actuarial assumed costs, budgeted costs, and assessed costs.

VII. Enhance long-term service capabilities. Insurance companies should calculate the overall commission based on established commission policies, cost budgets, and assessment mechanisms. Establish a commission incentive design and deferred distribution mechanism that aligns with product design and cost structure, and matches business quality and service quality. For policies with a payment period of 5 years (inclusive) to 10 years, the commission distribution time should not be less than 3 years; for policies with a payment period of 10 years or more, the commission distribution time should not be less than 5 years. Guide insurance sales personnel to retain long-term and continuously provide good service to customers. For different types of insurance sales personnel, insurance companies should establish a balanced and reasonable commission incentive distribution mechanism to effectively safeguard the legitimate rights and interests of insurance sales personnel.

VIII. Strengthen compliance and risk management. Insurance companies should enhance compliance management and risk monitoring in the design of personal marketing systems, product development, behavior control, and cost management, effectively identifying abnormal sales behaviors, sales arbitrage risks, etc., providing timely warnings and interventions to protect the legitimate rights and interests of insurance consumers. Establish a mechanism for the recovery of commission compensation due to economic losses caused by the illegal activities of insurance sales personnel, effectively preventing operational risks 9. Adhere to a customer-centric approach. Insurance companies should establish and improve suitability management systems, enhance relevant risk management, training assessment, professional standards, and supervision accountability mechanisms, and create a customer full lifecycle service system to ensure that suitable products and services are provided to appropriate consumers, better meeting the growing insurance protection and wealth management needs of consumers. Fully leverage the empowering role of technology to establish information platforms for team management, compliance management, and professional development, enhancing the digital intelligence level of customer service. Strengthen behavior management of insurance sales personnel, prohibiting the promotion of honorary titles based solely on premiums, commissions, and other such metrics.

1. Enhance professional identity and sense of belonging. Insurance companies should proactively strengthen communication with local governments, various insurance industry associations, and relevant departments, promoting support for insurance sales personnel to participate in social insurance and obtain residence permits according to policies for flexible employment, effectively improving the welfare and protection levels of insurance sales personnel. The China Insurance Industry Association should promote the establishment of a professional honor evaluation system for insurance sales personnel with Chinese characteristics.

2. Fully leverage the role of industry organizations. The China Insurance Industry Association should establish classification standards for personal insurance products and grading standards for insurance sales personnel, organizing insurance companies to carry out the grading evaluation of insurance sales personnel in a stable and orderly manner. Establish and improve the integrity information management and application mechanism for insurance sales personnel, regulating the reasonable and orderly flow of insurance sales personnel among market entities.

3. Strictly regulate according to the law. The Financial Regulatory Administration and various financial regulatory bureaus should strengthen corporate supervision according to the law, focusing on the scientific, stable, and sustainable nature of individual marketing systems and mechanisms. Each financial regulatory bureau should strictly implement local regulatory responsibilities, enhance investigations and inspections, strengthen supervision of insurance sales behaviors, and prevent sales misguidance and arbitrage risks. Institutions and individuals that violate regulatory requirements should be seriously investigated and held accountable according to the law and regulations. Distinguish between the personal responsibilities of insurance sales personnel and the management responsibilities of companies, coordinating the management of due diligence exemptions and dual penalties for negligence.

4. Insurance professional agencies, insurance brokers, and other institutions and channels engaged in the sale of personal insurance products and the provision of insurance services should implement the relevant requirements of this notice.

National Financial Supervision and Administration

April 14, 2025

This article is excerpted from the official website of the "National Financial Supervision and Administration," edited by Liu Jiayin of Zhitong Finance