Citigroup Outlook 2026 Chinese Insurance Industry: Life Insurance Enters Golden Era, Property Insurance CoR Continues to Improve

Citigroup believes that the Chinese life insurance industry is facing a significant turning point in 2026.

According to the Chasing Wind Trading Desk, Citigroup released its 2026 outlook report for the Chinese insurance industry, predicting that the life insurance sector will welcome historic development opportunities, while the comprehensive cost ratio (CoR) of the property insurance industry will continue to improve under favorable regulatory conditions. Citigroup maintains a buy rating on China Life and Ping An Insurance, believing that industry leaders will achieve K-shaped growth differentiation in the context of tightening regulations.

Citigroup estimates that over 70 trillion RMB in bank deposits opened after 2021 will mature in 2026, with retail investors seeking higher-yield reinvestment channels in a low-interest-rate environment. Any reallocation of funds towards insurance products (especially dividend insurance related to the stock market) will bring historic growth opportunities. Citigroup expects life insurance profit margins to remain stable, as the pricing rate cut in September 2025 can offset the margin erosion caused by the shift in product structure towards dividend insurance.

In terms of property insurance, Citigroup expects the industry premiums to achieve a steady growth of 4% in 2026, with further improvement potential in the CoR after excluding natural disaster losses. Favorable regulatory measures include extending compliance management of expenses to non-auto insurance businesses, continuous strengthening of auto insurance expense management, and gradually relaxing the upper limit of the self-pricing coefficient for new energy vehicle insurance from 1.35 to 1.5.

Life Insurance Welcomes Historic Opportunity for Wealth Reallocation

Chinese household savings surged after the pandemic, with Citigroup estimating that over 70 trillion RMB in deposits will mature in 2026. In a low-interest reinvestment environment, retail investors have a low risk appetite but desire higher returns, creating historic opportunities for expansion in the life insurance industry, especially through the bancassurance channel.

Data from Citigroup shows that in 2019, the proportion of insurance in Chinese household financial asset allocation was far lower than that in mature markets such as Japan, Singapore, and the UK, indicating significant growth potential. Several life insurance companies have achieved strong new business value (NBV) growth in the first half of 2024 and 2025, with leading companies such as China Life, Pacific Insurance, and Ping An Life recording double-digit growth on a comparable basis.

In terms of product structure, life insurance companies are actively shifting their product mix towards dividend insurance. The Citigroup report shows that in the first half of 2025, the proportion of dividend insurance in the first-year premium of Pacific Life reached 42.5%, while Ping An Life's proportion reached 40%, and the proportion of dividend insurance in China Life's agency channel exceeded 50%. This shift helps insurance companies reduce the cost of new policies and mitigate interest rate risks, while the recovery of protection-type products will become a long-term driver for profit margin improvement.

Citigroup expects life insurance profit margins to remain stable in 2026. The pricing rate cut in September 2025 can offset the margin erosion caused by the shift in product structure towards dividend insurance. Citigroup favors industry leaders such as China Life and Ping An Insurance in 2026, expecting a K-shaped growth differentiation between leading insurance companies and small to medium-sized insurance companies in the context of continued tightening regulations.

Ample Improvement Space for Property Insurance CoR

Citigroup expects the property insurance industry premiums to continue achieving a steady growth of 4% in 2026, mainly driven by auto insurance and personal property insurance businesses. In terms of the comprehensive cost ratio, there is still room for further improvement after excluding the impact of natural disaster losses Regulatory benefits are the main support for the improvement of CoR. First, the compliance management of expenses has been extended to non-auto insurance businesses, requiring actual insurance costs to align with regulatory filing levels, which will support CoR improvement in 2026 and 2027. Second, the regulatory intensity of auto insurance cost management continues to strengthen. Third, the upper limit of the self-pricing coefficient for new energy vehicle insurance has been gradually relaxed from 1.35 to 1.5, providing insurance companies with greater pricing flexibility.

The relatively mild natural disaster losses in 2025 provide a favorable environment for the performance of property insurance companies. Citigroup data shows that the top three property insurance companies achieved CoR improvement in the first nine months of 2025, with PICC Property and Casualty, as the industry leader with a market share of about 32%, performing particularly well.

Citigroup believes that PICC Property and Casualty should benefit the most from regulatory benefits and deliver the best performance among peers. However, Citigroup also points out that in a bull market environment, the attractiveness of the property insurance sector is relatively weak compared to the life insurance sector, as the investment returns of life insurance companies are more sensitive to stock market rises.

Continuous Optimization of the Regulatory Environment

Since 2025, Chinese insurance regulatory authorities have introduced a series of supportive policies to provide tailwinds for industry growth and profit margin improvement.

In October 2025, regulatory authorities issued the "Notice on Strengthening the Supervision of Non-Auto Insurance Businesses," requiring property insurance companies to optimize key performance indicators, downplaying scale-oriented indicators such as premium size, growth rate, and market share, while strengthening quality-oriented indicators such as compliance operation, profitability, and profit margin. The notice also requires strengthening expense management, clarifying the upper limit of expense ratios for each policy, and strictly prohibiting evasion of regulation through fictitious expense items.

In September 2025, regulatory authorities issued the "Guiding Opinions on Promoting the High-Quality Development of Health Insurance," encouraging the development of commercial medical insurance, long-term care insurance, and critical illness insurance, and supporting well-rated insurance companies to engage in dividend-type long-term health insurance business.

In April 2025, regulatory authorities issued the "Notice on Promoting the Reform of Personal Insurance Agency Channels," requiring deepening compliance management of agency channel expenses, streamlining agency team structures, establishing compensation structures that incentivize long-term service, and promoting the specialization of agency channels.

Additionally, the "Action Plan for Promoting Medium- and Long-Term Funds to Enter the Market," released in January 2025, requires large state-owned insurance companies to invest 30% of new premiums in the A-share market starting in 2025, with the assessment period extended to three years or longer. This policy is expected to enhance the investment returns of insurance companies, especially during stock market upcycles