CHINA Law and Practice Contributed by: Elsie Shi, George Yu, Eleanor Gu and Zach Xu, Jincheng Tongda & Neal Law Firm
12. Developments in Insurance Law 12.1 Significant Legislative or Regulatory Developments Opinions of the State Council on Strengthening Regulation, Preventing Risks and Promoting High- Quality Development of the Insurance Industry Issued by the State Council in late 2024 and serving as the overarching guideline for the NFRA’s enforcement actions in 2025, this document represents the most significant top-level design for the sector in a decade. It fundamentally reshapes the industry by mandating strict market access controls to prevent improper industrial capital influence, enforcing a rigorous clas- sification system for insurance products (separating savings from protection), and establishing a potent mechanism for risk resolution. It explicitly requires the industry to return to its fundamental function of risk protection and serves as the legal basis for the current wave of strict supervision. Notice on Promoting the Deepening of Reform of the Personal Marketing System in the Personal Insurance Industry Issued by the NFRA, this regulation was the central focus of market conduct supervision throughout 2025. It targets the long-standing industry issue where the expense assumptions reported in actuarial filings dif- fered significantly from the actual expenses incurred. The Notice requires insurance companies to strictly align their actual execution expenses with the filed actuarial assumptions. The rigorous enforcement of this regulation has profoundly impacted the bancas- surance and agency channels, forcing a reduction in commission rates and reshaping the profit models of insurance intermediaries.
Regulation on Administration of Network Data Security Issued by the State Council, this regulation acts as the external compliance standard for the insurance indus- try’s digital operations. It imposes stringent obliga- tions on insurers regarding the processing of personal information, data classification and cross-border data transfer. Specifically, for the insurance sector, it clari- fies the compliance boundaries for using “Big Data” in underwriting and claims adjustment, requiring insurers to obtain explicit, separate consent from policyholders when sharing data with third-party tech vendors or reinsurers, thereby significantly increasing the compli- ance cost for insurtech innovations. Measures for the Regulatory Ratings of Insurance Companies Issued by the NFRA, this measure establishes a formal supervisory-rating system for insurers covering gov- ernance, solvency, asset-liability matching, IT resil- ience, risk management and consumer protection. Ratings combine quantitative and qualitative indi- cators and are used for graded supervision, on-site triggers and market-access decisions. Practically, it raises regulatory emphasis on corporate governance, IT and consumer-protection practices. Measures for the Consolidated Supervision and Administration of Insurance Groups Issued by the NFRA, this measure tightens consoli- dated supervision by clarifying consolidation scope, applying “substance over form” for boundaries, and strengthening group governance, intra-group controls and concentration-risk management. It empowers the NFRA to require simplification of complex structures and to curb non-core expansion that increases group risk. The rule increases group-level transparency and resilience.
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