Over 3,000 companies removed! What's going on with this "big move" in China's insurance industry?

On February 27, the National Financial Regulatory Administration issued a statement with the latest data on the ongoing market cleanup and improvement efforts for insurance intermediaries since 2024.

From 2024 to 2025, a total of 3 insurance intermediary groups have been deregistered or revoked nationwide, along with 57 professional insurance intermediary legal entities; 3,730 insurance professional branch offices have been phased out, and 226 insurance brokerage agencies have been eliminated.

Behind these figures, a new trend is emerging in China’s insurance industry.

Why does the major cleanup of insurance intermediaries matter to every policyholder?

When you buy a life insurance policy at a bank or consult about critical illness insurance through a platform, there is often a licensed insurance intermediary providing the service.

According to Zishi Tang, these institutions mainly fall into two categories: one is dedicated insurance sales intermediaries (such as insurance brokers or agencies), and the other is part-time agents who sell insurance as a secondary job (like at a 4S dealership).

Both types of institutions represent insurance companies in selling products and also bear customer service responsibilities.

In recent years, some intermediaries have deviated from proper conduct: some have never actually operated after registration, becoming “shell” companies; some fake staffing or create false policies to extract commissions; others lack basic information systems, resulting in chaotic customer data and delayed responses during claims.

These behaviors not only disrupt the market but also raise doubts about policy validity and hinder claims processing.

The “Red Flags” of Insurance Intermediaries

What behaviors are regulators showing “zero tolerance” for amid the cleanup wave?

The official website of Beijing Jincheng Tongda Law Firm features a research article titled “Analysis of Compliance Red Lines and Governance Points for Insurance Intermediary Institutions,” which summarizes recent common violations:

1. Operating without a license or collaborating with unlicensed entities;
2. Fabricating false reports or financial data;
3. Impersonating others during sales or allowing unlicensed personnel to operate;
4. Operating across provinces without permission, such as an intermediary registered in Province A selling non-exempt insurance products to clients in Province B;
5. Using off-book rebates or fictitious expenses to break the “reporting and operation” commission cap;
6. Weak internal controls, with failures in personnel management, funds, and anti-money laundering measures.

Regulatory agencies across regions frequently issue “early warnings”

Zishi Tang has found that in the past year, regulatory authorities across China have repeatedly warned about the risks posed by illegal insurance intermediaries.

The Heilongjiang Regulatory Bureau of the National Financial Regulatory Administration, in routine supervision, identified organizations with names including “Insurance Claims,” “Insurance Consultation,” or “Insurance Services,” which lack the qualifications to operate as insurance intermediaries and are not authorized to conduct insurance business.

They also advise consumers to check the “Insurance Intermediary Cloud Platform” before purchasing insurance products or using related services, to verify the institution’s licensing and staff credentials.

The Xiamen Regulatory Bureau listed illegal insurance intermediaries that use “policy surrender,” “claims,” or “sales” as pretexts to infringe on consumers’ legal rights.

Specific schemes include:

Type 1: “Full Refund” Trap

Description: Criminals promote on social media, via calls or messages, claiming they can assist with full policy refunds or that there are no charges if unsuccessful, enticing consumers to entrust them with surrendering policies.

They often charge a fee based on a percentage of the refund amount or scam upfront fees under the guise of deposits or security deposits. Ultimately, consumers suffer greater losses than normal surrender, lose their original coverage, and may face legal consequences for forged evidence.

Type 2: “Injury Bounty Hunter” Scheme

Description: At accident scenes or near hospitals, scammers approach victims with promises of “high compensation” or “fast claims,” persuading them to let the scammers handle the process.

Consumers pay high fees, and their sensitive personal information (ID cards, bank details) may be sold for scams, loans, or other illegal activities.

Type 3: “Unified Insurance” Scam

Description: Criminals pose as insurance company staff, misleading consumers into purchasing “official commercial vehicle insurance” under the guise of “vehicle safety pooling services.”

Method: They attract consumers with low prices, claiming to be from “legitimate insurance companies” or “sales agents,” and charge fees.

These operators are not licensed insurance entities, and in case of traffic accidents, consumers risk not receiving full compensation.

The Insurance Industry Is Also Undergoing “Restructuring”

Zishi Tang’s research shows that China’s insurance reform involves two parallel but separate sales teams:

One is the sales staff of the aforementioned insurance intermediaries, employed by third-party organizations independent of insurance companies, such as insurance brokerage firms or specialized agencies, dedicated to selling and servicing insurance products.

The other is insurance agents (often called “salespeople”) who are directly contracted with life insurance companies and represent them in selling products, under the company’s management.

These two roles differ in identity, affiliation, and regulatory rules.

Notably, while cleaning up “shell” intermediaries, insurance companies themselves are also adjusting their agent teams.

The “2025 China Insurance Intermediary Market Ecosystem White Paper,” co-authored by Peking University HSBC Business School, indicates that by the end of 2024, the number of registered life insurance agents (salespeople) was 2.64 million.

These agents mainly sell life, health, and accident insurance—products that protect “life and health.”

While this is a significant reduction from the peak of 9.12 million in 2019, the decline has narrowed compared to 2.81 million at the end of 2023.

Despite the reduction in agent numbers, the overall quality of the industry is improving. In 2024, China’s insurance depth reached 4.2% (insurance premiums as a percentage of GDP), higher than 4.07% in 2023; insurance density (per capita premium) increased from 3,635 yuan to 4,046 yuan.

This indicates that even with fewer agents, premium income continues to grow, reflecting a more professional and efficient agent workforce and increasing customer willingness to buy insurance.

Risk Warning and Disclaimer

Market risks exist; please invest cautiously. This article does not constitute personal investment advice and does not consider individual users’ specific investment goals, financial situations, or needs. Users should evaluate whether any opinions, viewpoints, or conclusions herein are suitable for their circumstances. Investment carries risks, and responsibility rests with the individual investor.