According to the CITIC Securities Research Report, this round of draft amendments to the “Insurance Law of the People's Republic of China” systematically improves the regulatory framework at the legal level. As far as investors are concerned, we think the most direct impact is that the draft proposes to remove some static restrictions such as the 20% deposit of registered capital and the upper limit of financial insurance premiums, which is expected to reduce capital accumulation, optimize underwriting leverage, and support leading insurance companies to improve capital use efficiency and dividend ability. At the same time, we expect the second and third phase of the payment system to be implemented in 2027. A series of regulatory policies are expected to improve the industry ecology from the supply side, promote the improvement of operating quality and shareholder returns, improve the medium- to long-term development trend, and maintain the insurance industry's “better than the market” rating.

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