The dominance of bank insurance channels is waning for many small and mid-sized insurers that previously relied on high fees, high rebates, and short-term, high-yield products for rapid expansion.
New data reveals that annualized premium equivalent from the bancassurance channel in May was 26.1 billion yuan, a 22% year-on-year decline. Single-premium business reached 23.6 billion yuan, down 40% year-on-year. While overall industry data reflects a pullback influenced by seasonal factors and stricter enforcement of the "unified reporting" policy, a closer look by institution type shows a deepening divergence.
The "Big Seven" insurers—China Life, Ping An, CPIC, New China Life, China Taiping, PICC, and Taikang Life—continue to lead the pack. Although the year-to-date growth rate for their annualized premium equivalent has slowed from 88% in January to 34% for the first five months, their monthly APE in May stood at 10 billion yuan, accounting for nearly 40% of the total industry data shared among peers.
Non-bank-affiliated foreign insurers saw their year-to-date APE growth turn positive. Meanwhile, small domestic insurers reported total APE of 2 billion yuan for May, a 4% year-on-year decrease, with their market share shrinking to 7.6%.
Extending the timeline reveals that the struggles of smaller insurers became apparent following the implementation of the "unified reporting" policy in bancassurance and later in intermediary channels, coupled with the relaxation of the "one insurer per three bank outlets" rule. Even during the bancassurance boom in 2025, which saw it reclaim its position as the largest life insurance channel after over a decade, small domestic insurers experienced negative growth, a trend that persisted into this year's peak sales season.
Beyond the challenges in bancassurance, other long-standing issues for small and mid-sized insurers have been fully exposed in recent years, including weaknesses in the agency channel, a lack of product diversity, and heavy reliance on interest rate spreads. This raises the critical question: what is the path forward for their transformation?
Market Share of Small Insurers Drops to 7.6%
The strong performance of the bancassurance channel has continued from 2025 into the present, but small and mid-sized insurers appear to be missing out on the action.
Latest figures for May show that small domestic insurers collectively generated 2 billion yuan in APE, with a year-to-date total of 15.9 billion yuan, marking a 4% decline compared to the same period last year. This is not the first instance of negative year-on-year growth; their APE fell by 14% for the full year 2025 and by 8% in the first quarter of this year. Even during the peak January sales period, it declined by 11%.
Their market share has been steadily eroding. At the end of 2025, small domestic insurers still held a 14.86% share of the total monthly APE pool with 2.2 billion yuan. By January of this year, as other insurers ramped up efforts and the total market ballooned to 103 billion yuan, the retreat of smaller players became starkly evident, with their share plummeting to 5.2%. It briefly recovered to 10.3% in February before declining again in March and April, reaching 7.6% in May.
This loss of ground is unsurprising. For a long time, constrained by their inherent structure, most small and mid-sized insurers have had relatively weak agency forces, leading to an over-reliance on the bancassurance channel. Data once indicated that over 90% of premiums for some smaller insurers came from this channel, with high commission payments and various fees to banks being a common strategy for establishing a foothold.
This channel's characteristics have, in turn, shaped these insurers, making them more adept at selling savings-oriented products that are typically short-term, high-yield, and structurally simple. Some have even been criticized for resembling "wealth management companies."
The implementation of the "unified reporting" policy and the removal of bank partnership restrictions have fully exposed these weaknesses. Leading insurers, leveraging their brand strength and capital, have swiftly captured high-quality bank outlets, weakening the bargaining power and influence of smaller players. Concurrently, the risks embedded in their dependence on interest spreads are impacting performance. Against a backdrop of narrowing spreads and the transition to new accounting standards, the net assets of several small and mid-sized insurers fell by over 20% from the start of the year in Q1 2024, with spread losses threatening their core viability.
Big Seven Maintain Leadership, Foreign Insurers Rebound
In contrast to the struggles of smaller players, the "Big Seven" and non-bank-affiliated foreign insurers have shown stronger performances in the bancassurance channel in recent years.
In May, the Big Seven collectively generated 10 billion yuan in APE, accounting for 38.3% of the total 26.1 billion yuan shared among peers and occupying six of the top ten spots. This continues their trend from the past year. One reason is the accelerated expansion into bank outlet resources by major firms. For instance, China Life President Li Mingguang noted at the 2025 results briefing a commitment to comprehensive bancassurance layout and enhancing the quality of outlet operations. By the end of 2025, China Life partnered with over a hundred banks, with new policy sales points reaching 77,000, a 25.9% year-on-year increase.
Ping An Life has consistently topped the APE rankings for several months. Its strategy involves deepening an exclusive agency model paired with a tailored product matrix, focusing on major state-owned and high-quality joint-stock banks, selectively expanding into premium outlets, and standardizing operations to boost productivity. At Ping An's 2025 Annual General Meeting on May 20th, Co-CEO Guo Xiaotao stated that the bancassurance channel had experienced explosive growth, becoming a crucial channel and a key future driver for Ping An Life's performance.
Furthermore, leading insurers have been pushing both APE and single-premium business in recent years, particularly increasing single-premium sales to capture funds shifting from deposits. China Taiping's 2025 annual report showed that Taiping Life's single-premium first-year long-term insurance via bancassurance surged 541.4% year-on-year to HK$2.273 billion. New China Life's single-premium first-year long-term insurance in this channel jumped 80.9% to 19.96 billion yuan. China Life's equivalent business also saw a massive 195.5% increase to 31.619 billion yuan.
Non-bank-affiliated foreign insurers have also become prominent players over the past two years, with growth rates once second only to the Big Seven and far exceeding bank-affiliated and major domestic insurers. For example, in January, these foreign insurers collectively achieved 3.3 billion yuan in bancassurance APE, a 33% year-on-year increase. In the same month, the Big Seven grew by 88%, 13 domestic insurers by 19%, bank-affiliated insurers by 4%, while small domestic insurers declined by 11%.
The success of non-bank foreign insurers is closely tied to their professional expertise and operational quality. The current industry focus on participating insurance, especially in bancassurance, relies heavily on professional insurance service systems. These joint-venture and foreign firms have historically competed more on service than on fees, making them less impacted by the "unified reporting" policy.
Their APE growth has also moderated in recent months. The latest data shows foreign insurers generated 1.3 billion yuan in bancassurance APE in May, with a year-to-date total of 8.1 billion yuan, representing 1% year-on-year growth. This marks a return to positive territory compared to the -3% growth rate for the first four months.
Exploring a Transformation Path for Smaller Insurers
For small and mid-sized insurers, the challenges extend beyond bancassurance losses and heightened survival pressure. Recent market rumors in mid-May suggested potential regulatory caps limiting their business through insurance agencies to 40% of total premiums. This aims to further curb channel concentration, low-value scale, and disorderly fee competition, forcing a transformation in channel structure.
What does transformation entail? Some industry insiders believe the solution may lie not within the existing framework but outside it. Given that many small life insurers have a "wealth management business" DNA, forcibly cultivating a new "pure protection business" model internally often leads to internal conflict, resource drain, and strategic instability. Establishing "external pilot projects" is increasingly seen as a potential breakthrough. This doesn't mean separation from the group but involves creating appropriate organizational, operational, and cultural separation from traditional business—setting up independent teams, performance metrics, or even legal entities to explore pure protection products like medical insurance and term life insurance.
Diversifying product offerings is also a strategy employed by leading insurers. As mentioned by Ping An's Guo Xiaotao, alongside a balanced channel strategy, Ping An pursues a balanced product strategy, tailoring different products to specific channel characteristics and customer segments to enhance its new business value margin.
Regarding transformation ideas for smaller insurers, an executive from one company outlined several key points. First, strictly control liability-side costs and strengthen business quality and claims service management. Second, focus on asset-liability matching to develop refined asset operation capabilities, emphasizing the foundational role of interest spread profits for company earnings. Continuously strengthen investment capabilities while balancing objectives between financial investment returns and comprehensive investment returns, as well as net asset management and net profit management, in line with the latest Solvency II and new accounting standards. Third, persist in cost reduction and efficiency improvement, cutting management expenses, optimizing processes, and enhancing operational effectiveness to create conditions for structural profitability.
"Continuing to rely on interest spreads is no longer viable. Future life insurance operations must shift towards a balance of the three spreads—mortality, expense, and interest. In driving this change, smaller companies face greater pressure and difficulty. They must maintain patience and a long-term perspective, uphold strategic resolve, avoid being tempted by short-term gains, and not waver under temporary pressure," the executive further stated.
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