China's National Financial Regulatory Administration issued a notice strengthening regulation of universal-type life insurance, accompanied by an official Q&A, to address remaining weaknesses in protection features, account governance, aggressive investment practices and non-compliant sales. The notice tightens product rules by requiring universal life products to offer a minimum guaranteed interest rate while allowing insurers to adjust that minimum rate subject to specified constraints, and by raising the cap on base premiums for regular-premium universal life to support longer-term products. It prohibits developing universal life products with terms shorter than five years and promotes longer actual policy duration through product design elements such as surrender charges and persistency bonuses. Governance requirements cover the full account lifecycle from set-up to closure, including periodic asset-liability reviews, deficit remediation, clearer closure triggers and fair treatment, as well as more prudent setting of credited rates based on actual investment performance, a smoothing mechanism and stricter controls on special reserves. On investments, the framework tightens limits on concentration in exposures such as single equity investment funds and real-estate-related financial products, bans improper related-party dealings via multi-layer structures or channel arrangements, and sets stricter caps for non-standard investments in non-standard real estate and financial products. Sales measures include staff classification, suitability management, enhanced disclosure on consumer-impacting matters such as changes to minimum guaranteed rates and account closures, and a negative list of six prohibited sales behaviours, including providing indirect or implicit guarantees and shortening effective duration. A one-year transition period applies to existing business that does not meet the new requirements, while any products newly approved or filed during the transition must comply with the notice.
China Banking and Insurance Regulatory Commission 2025-04-25
China's National Financial Regulatory Administration tightens supervision of universal life insurance with a five-year minimum term and new sales restrictions
China's National Financial Regulatory Administration has issued a notice to strengthen regulation of universal-type life insurance, addressing weaknesses in protection features, account governance, investment practices, and sales compliance. Key measures include setting a minimum guaranteed interest rate, prohibiting terms shorter than five years, and tightening investment and sales practices. A one-year transition period applies to existing non-compliant business, with immediate compliance required for new products.