The Zhitong Finance App learned that Donghai Securities released a research report saying that the General Administration of Financial Supervision recently issued the “Notice on Launching Investigation and Rectification of “Quick Return” Products, and the “Quick Return” insurance products have initiated comprehensive investigation and rectification. With product reserves, capital strength, and channel management capabilities, the impact is relatively limited, and it is expected that the banking insurance channel share will increase in the structural clearance of the industry; if the transformation falls short of expectations, small and medium-sized insurers may face a slowdown in premium growth, pressure on channel acceptance, and even pressure on solvency. In the future, we can focus on tracking the growth rate of new banking insurance policies, share of futures contracts, dividend insurance supply, fee rate, and surrender rate assumptions. It is recommended to focus on large listed insurers with obvious moats.
The main views of Donghai Securities are as follows:
Strengthen supervision during the “good start” period to put an end to liquidity risks brought about by “long-term insurance and short business”
This rectification notice was issued against the backdrop of the continued deepening of the “integration of reporting and banking” channels in banking insurance channels, the low interest rate environment increasing pressure on interest spreads and losses, and the superposition of a “good start” preparation window for 2027. In product traceability, it was discovered that some personal insurance companies have extensively developed both normal and dividend insurance with a payment period of 3 years and an insurance period of 6 years in banking insurance channels, and the sales side often uses “3 year return and 6 year maturity” as a selling point to attract customers. Although this type of product is nominally long-term personal insurance, the asset side allocates long-term fixed income and non-standard assets to meet the premium paid by the end of the 3rd policy year, and customers can recover the principal amount or even a slight surplus after 3 years of payment. Essentially, they are used as short-term savings tools. Behind this, risks such as “long-term insurance and short operation”, term mismatch, fee differences, and centralized withdrawal are hidden behind them. Especially in an environment where interest rates are declining, the asset side allocates long-term fixed income and non-standard assets to redeem the guaranteed benefits of the policy, but the “3-year debt return” The rhetoric faces centralized withdrawal pressure, which can easily lead to liquidity risks and loss of interest spreads. The regulatory choice was to take action before and after the launch of “Good Start”. The purpose is to prevent problematic products from being concentrated during the peak season and to push the personal insurance debt side to shift from scale orientation to value and benefit orientation.
“Stop new, stop, and check hypotheses” are promoted simultaneously, and insurers with liquidity difficulties are given a certain flexible window
1) Suspension of renewal: In principle, products with a cash value exceeding the premium paid at the end of the 3rd policy year must not be newly reported; 2) Suspension: In principle, the stock of similar products is actively discontinued, but the policies already in effect are not affected and will be automatically stopped when the policy period ends; 3) Assumptions: Each insurer strictly implements “integration of reporting”, focusing on verifying the scientific, truthfulness, and rationality of actuarial assumptions such as cost rate, incidence rate, withdrawal rate, return on investment, etc.; and fully measure cash flow pressure in a scenario where interest rates fluctuate in both directions; 4) Verification window Companies with liquidity difficulties need to comprehensively assess the liquidity gap and formulate Clean up regulatory plans and communicate with supervisors, strictly control the scale in accordance with the “measure is input” principle, and set a period for suspension of sales and rectification. For companies that blindly rush to scale and trigger vicious competition, supervision can take measures such as interviews, order rectification, suspend product filing, and administrative penalties. This means that supervision has been further extended from the authenticity of costs to the rationality of product design. It no longer only focuses on handling fees, but also runs through the cash value structure and balance and liability matching, cutting off the chain of “reducing cost assumptions - increasing cash value - 3 year return - scale up - term mismatch” from the product design side.
A “good start” in the short term or under pressure will improve the long-term debt structure of insurers and the stability of investment-side allocation
Judging from the impact on the industry, new short-term banking insurance channel orders and the “good start” pace may be under pressure. In particular, for small and medium-sized insurers that rely on “pay 3 guarantee 6” quick return products, the pressure to switch products, adjust sales pace, and manage cash flow is even more prominent. In the medium to long term, the competitive space for banking insurance channels is narrowing around “payback speed,” product supply will shift more to long-term term delivery, dividend insurance, increased lifetime life, pension, and wealth inheritance products, and demand for “deposit-like replacement” products will also gradually shift to long-term asset allocation. Furthermore, this change is conducive to reducing liquidity risk and interest rate loss pressure brought about by shortening the debt side of personal insurance companies, and improving the long-term debt structure and investment side allocation stability of insurance companies.
Risk warning: New order sales fall short of expectations, putting pressure on debt-side growth; investment-side performance falls short of expectations due to declining long-term interest rates and equity market fluctuations; lower than expected property insurance risk reduction leads to high COR and policy risks.