Regulatory crackdown on banking and insurance! Closing the gray area of "small accounts," a trillion-dollar market faces reshuffling

March 31, according to information obtained by The Interface News from industry insiders, the Personnel Insurance Regulation Division of the National Financial Regulatory Administration has continuously issued the “Notice on Further Strengthening Fee Management for Bank Agency Channels” and accompanying Q&A (hereinafter referred to as the “new rules”). Based on the 2023 framework for “reporting and paying in one” in personal insurance, the regulator has again stepped up its efforts in managing fees in bank-insurance (banking-and-insurance) channels, shifting from compressing explicit costs to rectifying the space for hidden fees.

The target of this round of adjustments is the “off-balance-sheet expenses” issue that has long existed in the industry. The regulator emphasized that it must tighten the full-chain responsibility on the insurance companies—from product design to channel execution—and the fee reform in bank-insurance channels has therefore entered a deeper stage of institutional fixes.

Regulatory crackdown to block hidden fees

Looking back at the past two years, “reporting and paying in one” has pushed bank-insurance channel commission fees down significantly. Industry estimates show that the industry-wide average commission level has fallen by about 30% compared with earlier periods, and the results of cost reduction and efficiency gains have already become visible. But while “visible fees” are being squeezed, channel competition has not cooled; some fees have started to shift toward “off-ledger” channels, making grey areas even more covert.

Channel fees that are properly accounted for as allowable expenses are typically referred to as “on-the-books,” meaning the commissions agreed upon in the cooperation agreements between the insurance company and the bank, and they are an important source of the bank’s intermediary business income. As for so-called “off-the-books,” it refers to paying extra incentives to front-line personnel through cash or disguised interest transfers, combined with practices such as overstating expenses and misallocating fees, which has gradually evolved into a persistent industry malady.

A senior executive of a life insurance company told The Interface News that the business scale of bank-insurance channels, in essence, depends on the profit-sharing mechanism between the insurance company and the bank. “The depth of channel cooperation is, to a large extent, determined by the level of commission fees and the investment of integrated resources such as deposits and custody. In actual operations, banks tend to choose partners with higher overall returns, and insurance companies have relatively limited control over the channel.”

The Interface News learned that currently, the “on-the-books” fees for bank channels are usually between 20% and 40% of the first-year premium. This level is set by the head office through unified pricing, but in specific execution, branches often further mark it up. In cooperative arrangements among branches in some regions, it is not uncommon for the effective commission rate to be more than 30% higher than the head-office price.

Beyond that, 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 official ledger, further push up the effective expense ratio.

As expenses keep leaking outward, the true cost of some businesses has clearly deviated from actuarial assumptions, and the risk of adverse spread has accordingly accumulated, becoming a key focus of this round of regulatory remediation.

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

From the perspective of fee management, the regulator requires that when insurance companies file their bank-insurance products for record, they must separately submit specific items such as commissions, incentives for the compensation of bank-insurance specialists, training and customer service expenses, and allocated fixed expenses, and they must strictly follow the results of the filing. In other words, every expense not only must be “reported clearly,” but also must be “used properly.” All expenditures must come with documentation that is real, lawful, and valid.

At the same time, the regulator embeds “reporting and paying in one” into the corporate governance framework, further straightening the chain of responsibility. The board of directors must regularly hear special reports; the general manager is fully responsible for overall work; the chief actuary, the finance负责人, and channel-related executives each have their own duties; and the heads of all levels of branches are directly responsible for execution within their jurisdictions, forming a closed-loop management system from the headquarters to the front line.

For the bank-insurance specialist compensation issues that have occurred frequently before, the new rules also provide more operational constraints. The regulator clearly stated that insurance companies may not require or imply that specialists use their compensation to promote business. Any business-related advance payments of expenses must be booked and claimed accurately, and must be uniformly included under training and customer service expenses, without being handled in a disguised way through compensation. At the same time, compensation should, in principle, be paid out via bank transfer to ensure specialists have independent discretion over their income, cutting off potential routes for funds to flow back.

In the areas of fee allocation and business promotion, the regulator also addresses institutional shortcomings. Multi-channel joint business development must follow the principle of “who benefits, who bears the burden,” and fees must not be passed among each other. Relevant business activities must establish ledger-style records management and realize traceability throughout the entire process.

To ensure the implementation of the system, the regulator also simultaneously strengthens inspection and notification mechanisms. “Reporting and paying in one” will continue to undergo on-site inspections, and typical cases of violations will also be notified to the industry, further raising the cost of noncompliance.

Overall, this round of policy upgrades is not only about simply cutting fees; it also attempts to “fence in” with the institution, bringing fee practices that have long kept bank-insurance channels in grey areas onto rails that can be regulated and traced. The logic of competition has also therefore been recalibrated.

High growth in bank-insurance, clear Matthew effect

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

The Interface News previously learned from industry insiders that in 2025, bank-insurance channels’ recurring premium for the first payments maintained relatively rapid overall growth. Although the year-on-year growth rate in individual months slowed somewhat in the second half, the full year still achieved an increase of about 10%, and the scale of recurring premiums for the first payments reached 3,973 billion yuan.

Based on data disclosed by listed insurance companies, the recovery of bank-insurance channels has some representativeness. In 2025, Taikang Life’s bank-insurance channel achieved scale premiums of 61.618 billion yuan, a year-on-year increase of 46.4%. Among them, new policies’ recurring premiums for the first payments reached 16.9568 billion yuan, up 43.2% year on year. New China Life’s bank-insurance channel achieved premium income of 72.102 billion yuan, up 39.5% year on year; first-year recurring premiums for long-term insurance reached 17.974 billion yuan, up 29.6% year on year.

PICC Life’s new business value for bank-insurance channels in 2025 was 4.672 billion yuan, up 102.3% year on year under comparable accounting. Its first-year recurring premiums increased 66.3% year on year. China Life’s bank-insurance channel total premiums were 110.874 billion yuan, up 45.5% year on year; new business premiums were 58.506 billion yuan, up 95.7% year on year.

Ping An Life’s new business value for bank-insurance channels was 9.408 billion yuan, up 138% year on year. Overall, the leading insurance companies generally achieved synchronized growth in both scale and value in their bank-insurance channels.

Entering 2026, bank-insurance channels continued the growth trend from before. Data show that in the first two months of this year, the industry’s recurring premiums for the first payments increased by about 21% year on year, achieving a “good start to the year.” Among them, Ping An Life’s recurring premium income for the first payments reached 15.7 billion yuan, ranking first in the industry; the “old seven” insurance companies collectively had roughly 53 billion yuan of recurring premium for the first payments, up 71% year on year.

While scale recovered, industry expectations for bank-insurance channels have also been changing.

At the 2025 annual performance press conference of New China Life, Vice President Wang Lianwen said that the bank-insurance market in 2026 will show three trends: first, scale will still maintain steady growth; customer demand will continue to differentiate; combined with pressure on banks’ income from fee-based services, new bank-insurance premiums are expected to continue the growth trend, and signs have already appeared from the first-quarter performance; second, regulatory and market constraints will strengthen in parallel—“reporting and paying in one” will continue to deepen, consumer rights protection requirements will increase, and banks will put forward higher demands on the comprehensive service capabilities of cooperative insurance institutions; third, market differentiation will accelerate, industry concentration will further increase, and institutions with asset-liability management capabilities and professional operating capabilities will have stronger competitive advantages.

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