China

Principal Legislation

Non-marine insurance in China is governed by the Insurance Law of the People’s Republic of China, which came into effect on 1 October 1995. It was amended in 2003 and 2009 to expand regulatory oversight and strengthen insurer obligations. A major revision is currently underway (expected 2024–2025) to address digital insurance, consumer protection, and risk-based supervision.

Supervision

The insurance supervisory authority in China is the National Financial Regulatory Administration (NFRA), a ministerial-level public service department reporting directly to the State Council. NFRA oversees insurance regulation and introduced new Insurance Company Supervision Rating Guidelines effective March 2025 to standardize insurer supervision.

Admitted/Non-Admitted

Foreign insurers are permitted to establish wholly owned subsidiaries, joint ventures, or branches in mainland China, subject to licensing by the National Financial Regulatory Administration (NFRA). These entities are authorized to conduct insurance business within China, including underwriting and claims handling. However, foreign insurers without a valid license from the NFRA are prohibited from engaging in insurance activities, such as marketing or selling insurance products, within mainland China.

Compulsory Classes

The only nationwide compulsory insurances in China are motor third-party liability and nuclear liability. In various provinces and cities, local governments require additional compulsory coverage, including medical malpractice, personal accident insurance for public transport passengers, and personal accident and medical insurance for construction workers. These regional mandates vary and are enforced according to local regulations.

State Involvement

China has five major state-owned insurance companies that play a key role in the market. Regulators have directed these insurers to increase investments in domestic equities to support the stock market and promote long-term sustainable growth.

Tariff Classes

Compulsory motor third-party liability is the only tariff class in China, with premiums regulated by the National Financial Regulatory Administration (NFRA).

Premium Taxes and Charges 

Non-life and short-term insurance classes are subject to a 6% value-added tax (VAT), replacing the previous business tax, plus a municipal surcharge ranging from 0% to 0.5% depending on the locality. These taxes are paid by the insurer.

Policy Language

Insurance policies must be issued in Chinese. Other languages may be included upon request, but the Chinese version prevails in case of any discrepancies.

At the end of 2024, China’s non-life insurance market comprised around 110 licensed insurers, including both domestic companies and foreign-invested entities. The domestic sector is dominated by state-owned enterprises, either fully state-owned or with significant government shareholdings. While the People’s Insurance Company of China (PICC) Group continues to be the largest player, its market share has decreased over recent years due to growing competition from private and foreign-invested insurers. Foreign insurers now hold a more notable presence, collectively accounting for approximately 10–15% of the non-life market as they expand through wholly foreign-owned subsidiaries and joint ventures.

As of the end of 2024, China’s life insurance sector includes over 80 licensed life insurers, with a balanced mix of domestic and foreign-invested companies. The market is highly concentrated, with the top three insurers accounting for around 50% of total premiums. State-owned China Life is the largest player, although its market share has gradually declined due to increasing competition from private and foreign insurers. China is currently the second-largest life insurance market in Asia, behind Japan, and ranks among the top five globally in terms of premium volume.

The primary distribution channel for large commercial insurance accounts is direct engagement between insurer branch staff and corporate clients. Agents and appointed representatives, including car dealerships and travel agencies, generate much of the personal lines business. Bancassurance is a leading channel, particularly for short-term, single-premium life products like universal life and endowment policies, often marketed as alternatives to deposit accounts.

China faces a complex mix of natural exposures—though it’s not located on major plate boundaries, intra-plate faults have historically generated devastating earthquakes, with many major cities sitting in high-intensity MMI VIII+ zones. In contrast, coastal megacities like Shanghai are generally less exposed to seismic risk. The southeast coast, particularly Guangdong, Guangxi, Fujian, and Hainan, is vulnerable to pacific typhoons between April and November. Flooding is the most frequent and destructive catastrophe—orchestrated by monsoon rains and typhoon remnants—impacting roughly 46% of the country and cutting across flood-prone river basins like the Yangtze, Pearl, and Yellow. Severity and frequency of these hazards continue to rise under climate change trends.