Regulatory crackdown on banking and insurance! Closing the gray area of "small accounts," the trillion-yuan market is set for reshuffling.

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Interface News reporter | Lü Wenqi

On March 31, Interface News learned from within the industry that the National Financial Regulatory Administration’s Person Insurance Supervision Department has repeatedly issued the “Notice on Further Strengthening the Management of Bank Agency Channel Fees” and accompanying Q&A (hereinafter referred to as the “new rules”). Building on the 2023 framework of “reported premiums and commissions in line” for life and personal insurance (“bao-xing-he-yi”), regulators have again stepped up their oversight of fee management in bank-insurance (bank agency) channels. The focus has shifted from reducing explicit costs to rectifying the space for implicit fees.

The target of this adjustment is the “off-balance-sheet expenses” issue that has long plagued the industry. Regulators emphasized that insurance companies must bear responsibility for the entire chain—from product design to channel execution—and the fee reform of bank-insurance channels has therefore entered a deeper stage of institutional patching.

Regulators step up efforts to block implicit fees

Looking back at the past two years, “reported premiums and commissions in line” has driven bank-insurance channel commissions noticeably lower. Industry estimates show that, compared with before, the industry-wide average commission level has fallen by about 30%, and the effects of cost reduction and efficiency gains have already begun to show. However, while “visible fees” are being compressed, competition among channels has not cooled; some fees have instead shifted toward the “outside the books,” making the grey space even more concealed.

Channel fees that are properly booked for compliance purposes are typically called “on-the-books,” meaning the commissions agreed between an insurance company and a bank in their cooperation agreement, and an important source of the bank’s intermediary business income. As for the so-called “off-the-books,” it refers to additional incentives paid to front-line personnel through cash or disguised benefit transfers. Coupled with actions such as inflating expenses improperly and misallocating fees, it has gradually evolved into a stubborn industry malady.

A senior executive of a life insurance company told Interface News that the business scale of bank-insurance channels essentially depends on the allocation mechanism of interests between insurance companies and banks. “The depth of channel cooperation is largely determined by the commission level and the input of comprehensive resources such as deposits and custodial services. In actual operations, banks tend to choose counterparties with higher overall returns, while insurance companies’ ability to control channels is relatively limited.”

Interface News learned that, currently, the “on-the-books” fees for bank channels are typically between 20% and 40% of the first-year premium. This level is set uniformly by the head office, but in concrete execution, branches often further increase it on top of that base. In cooperation arrangements among some local branch offices, it is not uncommon for the effective commission rate to be more than 30% higher than the head-office pricing.

In addition, the long-standing “off-balance-sheet expenses” problem in the industry also cannot be ignored. Multiple industry insiders pointed out that some insurance companies obtain business by providing additional incentives to bank outlets or front-line staff. These expenses, which are not included in the formal books, further push up the actual expense ratio.

As costs continue to spill over, some business’s true cost has already clearly deviated from actuarial assumptions, and the risk of adverse expense spread has accumulated accordingly—becoming a key focus of this regulatory crackdown.

These new rules are precisely designed to carry out a “fine-grained blockade” around this grey area.

In terms of expense management, regulators require that when insurance companies file for bank-insurance products, they must separately submit specific items such as commissions, incentive pay for bank-insurance specialists, training and customer service expenses, and allocated fixed expenses, and must strictly follow the filing results. In other words, for every expense, it is not only required to be “reported clearly,” but also “used correctly.” All expenditures must come with real, legal, and valid supporting documentation.

At the same time, regulators embed “reported premiums and commissions in line” into the corporate governance framework, further straightening the accountability chain. The board of directors must regularly listen to special reports; the general manager bears overall responsibility for work; the chief actuary, the finance head, and channel-related executives each perform their own duties; and heads of branch institutions are directly responsible for execution in their jurisdiction, forming a closed-loop management system from headquarters to the front line.

In response to the earlier frequent issues related to bank-insurance specialists’ compensation, the new rules also set out more operational constraints. Regulators clearly state that insurance companies must not require or imply that specialists use their compensation for business promotion. Expenses that are advanced for underwriting must be accounted for based on facts and uniformly included in training and customer service expenses; they may not be handled in a disguised manner through the guise of compensation. At the same time, compensation should, as a general rule, be paid out through bank transfers, so that specialists have independent discretion over their income and potential “return flow” routes are cut off.

In the parts related to expense allocation and business promotion, regulators also address institutional gaps. Multi-channel joint business development must follow the principle of “who benefits, who bears the responsibility,” and expenses may not be shifted to each other. Relevant business activities must establish ledger management to ensure traceability throughout the entire process.

To ensure the system is implemented, regulators also simultaneously strengthen inspection and notification mechanisms. “Reported premiums and commissions in line” will continue to undergo on-site inspections, and typical cases of noncompliance will be publicly circulated within the industry, raising the cost of violations even further.

Overall, this round of policy upgrades is not just a simple reduction of expenses; it attempts to “fence off” the grey areas through institutional safeguards, bringing long-term expense behaviors in bank-insurance channels into rails that are regulatable and traceable. As a result, the logic of competition is also being recalibrated.

High growth in bank-insurance, with a clear “Matthew effect”

In 2025, against the backdrop of continued pressure on direct individual insurance (individual channels), bank-insurance channels once again became the main source of growth for the life insurance industry and returned to the position of the number one channel.

Interface News previously learned from within the industry that in 2025, bank-insurance channels’ regular premium (for coverage during the term) overall maintained relatively rapid growth. Although the month-on-month growth rate in the second half saw some slowdown, the full year still achieved an increase of about 10%. The size of regular premium reached 397.3 billion yuan.

Judging from disclosures by listed insurers, the rebound in bank-insurance channels has a certain degree of representativeness. In 2025, Taikang Life’s bank-insurance channel achieved scale premiums of 61.618 billion yuan, up 46.4%. Of this, the new insurance regular-premium scale amounted to 16.9568 billion yuan, up 43.2%. Xinhua Life’s bank-insurance channel achieved premium income of 72.102 billion yuan, up 39.5%. Its first-year regular premium for long-term insurance was 17.974 billion yuan, up 29.6%.

PICC Life’s new business value from its bank-insurance channel in 2025 was 4.672 billion yuan, up 102.3% year-on-year on a comparable basis. Its first-year regular premium was up 66.3% year-on-year. China Life’s total premiums in its bank-insurance channel reached 110.874 billion yuan, up 45.5%, and its new single premiums were 58.506 billion yuan, up 95.7%.

Ping An Life’s bank-insurance channel new business value was 9.408 billion yuan, up 138% year-on-year. Overall, among leading insurers, bank-insurance channels generally saw synchronized growth in both scale and value.

Entering 2026, bank-insurance channels have continued the growth trend from before. Data show that in the first two months of this year, the industry’s regular premium increased by about 21% year-on-year, achieving a strong start. Among them, Ping An Life’s regular premium income reached 15.7 billion yuan, ranking first in the industry; the “Old Seven” insurers together had about 53 billion yuan of regular premium, up 71% year-on-year.

While the scale rebounded, the industry’s expectations for bank-insurance channels have also been changing.

At Xinhua Life’s 2025 annual performance release conference, Vice President Wang Lianwen said that in 2026, the bank-insurance market will show three main trends: first, the scale will still maintain stable growth, customer demand will continue to differentiate, and combined with pressure on banks’ fee income (bank intermediary income), bank-insurance new single premiums are expected to continue their growth trend, as hinted by performance already seen in the first quarter; second, regulatory and market constraints will strengthen in parallel. “Reported premiums and commissions in line” will continue to deepen, requirements for protecting consumers’ rights and interests will rise, and banks will put forward higher requirements for the comprehensive service capabilities of cooperating insurance institutions; third, market differentiation will accelerate, industry concentration will further increase, and institutions with the ability to manage assets and liabilities and professional operational capabilities will have stronger competitive advantages.

In the view of insiders, these changes also imply that competition in bank-insurance channels is shifting from a pure race for scale expansion to a contest of compliance constraints and comprehensive capabilities.

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Editor: Cao Ruitong