The importance banks place on bancassurance this year may have reached a new level. Data from the National Financial Regulatory Administration shows that the net interest margin for commercial banks was 1.40% at the end of the first quarter of 2026, declining again after remaining flat for three consecutive quarters in 2025. Meanwhile, non-interest income accounted for 24.16% of total income during the reporting period, an increase from 22.53% at the end of the fourth quarter of 2025. With interest margins continuing to operate at minimal levels, fee-based income is critically important, and insurance distribution is a key component.
In the past, discussions about bancassurance typically focused on insurance companies. The main topics were which insurer had high new business premiums, which had strong recurring premium performance, which ranked well in major bank channels, and which secured resources within the "dual postal" system. However, from the bank's perspective, bancassurance involves a different set of calculations.
Banks are not primarily concerned with which insurer tells a better story. They are more focused on practical questions: Can this type of product generate stable fee income? Does it match the risk preferences of our clients? Will it reduce complaints? Can it help fill the wealth management product shelf in a low-interest-rate environment? Does it give our branches and relationship managers something viable to sell?
With loan interest rates declining, deposit costs remaining rigid, and quality assets hard to find, the traditional spread-based business for banks is becoming thinner. Bancassurance is re-emerging as a significant opportunity precisely at this juncture, as it is one of the few businesses that allows banks to address "scale, fee income, and long-term client relationships" simultaneously. Insurance products happen to meet part of this demand.
It is clear that the focus of the profitable bancassurance business is shifting from "how much is sold" to "how long it stays sold." The annual report of Postal Savings Bank of China provides a telling figure: in 2025, the bank distributed long-term recurring premium insurance products worth 1,034.06 billion yuan, accounting for 58.26% of its total agency insurance sales, an increase of 4.78 percentage points year-on-year. This number indicates that banks are not solely relying on single-premium products to boost scale; long-term recurring premiums are becoming a more critical metric.
Consequently, banks are re-evaluating their insurance partners. In April 2024, the National Financial Regulatory Administration issued a notice removing the restriction on the number of insurance companies that commercial bank branches and outlets could partner with, while also stipulating that commission rates agreed upon in agency agreements must not exceed the product-filing commission levels set by the insurance company's head office.
While the removal of the restriction superficially appears to offer more opportunities for insurers, in reality, it has increased the banks' power to select. Whether an insurer's products make it onto the shelf, secure prominent placement, or get recommended by relationship managers depends on factors like head office approval, product suitability, service capability, complaint risk, and commission compliance.
In March 2025, the National Financial Regulatory Administration further issued the "Commercial Bank Agency Sales Business Management Measures," effective from October 1, 2025. The rules require commercial bank head offices to centrally manage agency sales businesses and implement a list-based system for partner institutions. When reviewing insurance company eligibility, banks must assess solvency, risk management capabilities, and information disclosure. During the sales process, banks must clearly distinguish between agency products and deposits to avoid mis-selling and must strengthen suitability and retrospective management.
Applying these rules to bancassurance sends a clear message: banks cannot merely act as "channels"; they must also take responsibility for their product shelves. Therefore, the competition in bancassurance from the bank's viewpoint is not a one-way scramble by insurers for bank partnerships. More accurately, it is banks re-engineering their own financial product shelves. Whether an insurance company remains on the shelf depends on its ability to pass through the bank's internal gates for product, compliance, consumer protection, risk control, and client management.
In short, the next phase of bancassurance competition, while appearing to be insurers vying for banks, is essentially banks selecting insurers. The differing logic behind this selection process becomes clearer when examining the annual report data of different types of banks.
Banks with varying resource endowments and client base structures have completely different positioning and strategies for bancassurance. Representative examples include Postal Savings Bank of China, China Merchants Bank (CM BANK), and Ping An Bank, each embodying a distinct bancassurance logic.
Postal Savings Bank of China represents the logic of extensive branch networks, serving the mass market and long-term savings-oriented clientele. It highlights the impact of broad market reach and physical network access on bancassurance scale. In 2025, its long-term recurring premium insurance sales reached 1,034.06 billion yuan, accounting for 58.26% of its total. For a bank like Postal Savings with a vast network, the subsequent critical challenge is whether renewal services, client suitability assessments, and surrender dispute management can keep pace with the growth of its long-term recurring premium business.
China Merchants Bank (CM BANK) represents the wealth management-oriented bank logic. In 2025, its agency insurance premiums reached 147.655 billion yuan, a year-on-year increase of 25.96%. Its bancassurance business is embedded within its broader wealth management ecosystem, forming part of the product shelf alongside funds, wealth management products, trusts, and private banking services. This model relies more heavily on client segmentation, asset allocation, and professional sales capabilities.
Ping An Bank presents a more unique case. Leveraging the Ping An Group's advantages in healthcare and elderly care, it integrates products and services like "insurance + home-based elderly care," "insurance + high-end elderly care," and "insurance + medical health." Group synergy can indeed enhance product supply and service integration efficiency. In 2025, Ping An Bank's agency personal insurance income was 1.292 billion yuan, surging 53.3% year-on-year. However, this model also faces stricter scrutiny regarding aspects like whether affiliated cooperation maintains fair access, if client choices are sufficiently open, and if the sales process adequately clarifies the respective responsibilities of the bank and the insurance company.
Viewed together, these three banks do not represent a ranking of better or worse. Even though they all sell insurance, they are essentially selling different things. Postal Savings sells broad market access, China Merchants Bank (CM BANK) sells asset allocation capability, and Ping An Bank sells its group ecosystem.
Precisely because banks have their own distinct client structures, branch network logic, and business priorities, bancassurance channels have less inherent "centripetal force" that naturally tilts towards a specific type of insurance company. This leads to another commonly misunderstood issue: bank-affiliated insurers were often perceived to have an inherent channel advantage. With the parent bank providing clients, branches, and brand recognition, the subsidiary was thought to have a home-field advantage in bancassurance. However, the bank's perspective is not that simplistic.
Banks are indeed willing to support their own insurance subsidiaries, but their primary responsibility is to their own clients and income. If the subsidiary's products are unsuitable, services lagging, value metrics unstable, or complaint risks high, the parent bank will not hand over its entire product shelf. This places higher demands on bank-affiliated insurers. Their true value lies in whether they can become the parent bank's central insurance competency hub, helping the parent bank identify suitable products, service clients, manage renewals, reduce complaints, and enhance pension finance and wealth management solutions. Even with a home-field advantage, a bank-affiliated insurer's performance depends on its products, services, and professional capabilities.
From the bank's standpoint, the bancassurance channel is becoming both more significant and more challenging. Its significance stems from the fact that, after interest margin compression, banks need fee income and products that can support pension finance, wealth management, and long-term client relationships—areas where insurance products intersect perfectly. The challenge arises because banks can no longer treat bancassurance merely as a counter sales target. Following the new agency sales regulations, banks must manage partner eligibility, products, sales processes, complaints, and ongoing policy servicing. While insurers provide the products, banks must also shoulder the responsibility for their shelves.
Therefore, the future divergence in bancassurance will be determined by those insurance companies that can help banks serve clients throughout their lifecycle and those banks that can successfully integrate insurance into asset allocation, retirement planning, and consumer protection frameworks.
In the long run, the greatest risk for bancassurance remains selling long-term financial commitments as short-term gains. For many years, bancassurance complaints and disputes have often revolved around persistent issues: presenting insurance as a deposit, describing uncertain returns as guaranteed, selling long-term products to clients with short-term funding needs, downplaying surrender penalties, and inadequately managing the suitability for elderly clients.
In a low-interest-rate environment, this risk warrants even greater vigilance. Client anxiety over returns is stronger, banks' need for fee income is more pressing, and insurers' desire for scale is more intense. The convergence of these three forces can easily distort sales practices. For banks selling insurance, the most important principle is clarity. How long will the client's money be locked in? Where do the returns come from? Who bears the risks? What are the losses upon surrender? Addressing these questions upfront is the only way for bancassurance to have a sustainable future.
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