Participating insurance products have become market favorites in recent years due to their "fixed plus floating" mechanism design. This structure helps insurers reduce rigid costs while allowing policyholders to share in company profits, making them a key focus for insurance companies.
During recent earnings briefings by the five major listed insurers, management teams indicated that aggressively developing participating insurance has become a common strategy. However, based on 2025 operational data, non-participating traditional products like whole life and endowment insurance continue to dominate premium contributions, maintaining their top position thanks to substantial renewal premium bases.
Driven by regulatory guidance and proactive corporate transformation, participating insurance is undoubtedly transitioning from a supporting role to center stage. The question remains: how long until it claims the top spot in life insurance?
The persistent low-interest-rate environment in 2025 continues to squeeze insurer profit margins, with interest spread risks looming over the industry. Participating insurance's "guaranteed return plus floating dividend" design helps mitigate insurers' rigid liability costs while meeting customer asset appreciation needs through variable returns, making it the preferred choice for most insurers, including the top five listed companies.
Annual reports highlight "participating insurance" and "variable return products" as key themes. China Life Insurance mentioned significant achievements in transitioning to variable return business, with new business liability costs declining steadily for three consecutive years. In 2025, participating insurance accounted for nearly 60% of first-year regular premium income in individual channels, becoming a crucial support for new premium growth.
Ping An Insurance reported participating insurance scale premiums reaching 91.887 billion yuan last year, surging 41.28% year-over-year. At China Pacific Insurance, participating products constituted over half of new regular premiums, reaching 61.4% in agent channels. New China Life Insurance fully launched its participating insurance transformation, achieving 11.933 billion yuan in first-year premiums for long-term participating products, marking substantial breakthrough in product restructuring.
"The company firmly advanced participating insurance transformation in 2025, achieving 12 billion yuan in sales," stated New China Life President Gong Xingfeng during the earnings briefing. He noted that intensified efforts since the second and third quarters yielded expected results, with 2026 focusing on expanding product types like participating annuities and leveraging policy dividends.
Ping An Insurance Vice President and CFO Fu Xin recently indicated that participating insurance accounted for approximately 30% of individual channel business in 2025, with plans to make it the core product for 2026, expecting further market share growth.
Mitigating interest spread risk represents a key motivation for insurers' shift toward participating products. Fu Xin explained that emphasizing participating business aligns with adapting to low-interest-rate conditions. For customers, these products enable sharing insurers' excess investment returns, gaining competitive advantage during rate declines. For insurers, they help hedge against interest rate fluctuations, optimize liability cost structures, and allow more flexible equity asset allocation.
Despite rapid new premium penetration by participating insurance, non-participating traditional products remain the stabilizer for the top five insurers when considering total premium structure (new plus renewal). This contrast stems primarily from renewal premium base effects—traditional products have accumulated massive policy reserves over decades, while participating insurance only recently resumed high growth.
Specifically in 2025, China Pacific's traditional insurance scale premiums reached 187.524 billion yuan, comprising 63.38% of total premiums. Ping An's traditional life insurance hit 231.109 billion yuan, with annuity products adding 108.155 billion yuan, together accounting for 51.29%. New China Life's traditional insurance premiums totaled 106.69 billion yuan (54.47%), while PICC Life's ordinary life insurance reached 92.896 billion yuan (73.7%).
Notably, the highest-premium products for all five major insurers were traditional policies. China Life's top product generated 37.044 billion yuan, Ping An's reached 29.798 billion yuan, China Pacific's 17.183 billion yuan, New China Life's 18.182 billion yuan, and PICC Life's 15.301 billion yuan.
"Traditional insurance maintains dominance because customer demand for guaranteed returns aligns with insurers' strategies to prevent interest spread losses during rate declines," explained Yang Fan, General Manager of Beijing Paipai Insurance Agency. He noted reduced risk appetite drives preference for fixed-return products, while sales channels' existing habits create ongoing demand-supply alignment.
Industry consensus confirms participating insurance's importance amid persistent low rates. First-quarter 2026 data shows sales momentum continuing, particularly appealing to middle-aged savers and conservative investors. Bank distribution channels report significant participating insurance share increases, with some insurers experiencing product quota shortages.
However, surpassing traditional insurance in total scale will require time. "Current bottlenecks include delayed customer awareness on the demand side and insufficient professional capabilities on the supply side," Yang Fan observed. Customers accustomed to guaranteed returns misunderstand non-guaranteed portions, while sales teams lack expertise to explain investment logic, creating structural disconnects.
Yang estimates participating insurance needs three to five years for gradual replacement rather than policy-driven rapid transition. This evolution will accompany dynamic premium rate adjustments, with traditional products' price advantages weakening as rates decline. Market transition from fixed-income to equity thinking requires time to build trust and validate investment capabilities.
During this expansion, insurers must fundamentally reshape channel competitiveness—transitioning from product sales to asset allocation advisory services. Companies should shift from scale-focused to value-oriented operations, establishing evaluation mechanisms based on long-term investment capabilities and dividend realization rates. Intensive agent training should enhance macroeconomic and complex product expertise, compensating for reduced certainty through lifelong wealth management services.
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