The 105 Red Lines Define Industry Boundaries: The Regulatory Logic Behind the Upgraded 2026 Personal Insurance Negative List and Industry Restructuring

Source: Guan Chao Finance

From 52 to 105, nearly doubling in seven years of expansion.

Recently, the Human Insurance Supervision Department of the China Banking and Insurance Regulatory Commission issued the “Negative List of Human Insurance Products (2026 Edition)”, prompting all human insurance companies’ chief actuaries, product development, and compliance departments to quickly enter a state of intensive review and comparison.

This is no longer just a list of prohibitions, but also an annual indicator of the direction for human insurance product development and regulation. Since its first release in 2018, regulators have continuously revised and expanded this list over the years. From 52 to nearly 100 items, the expansion behind the list reflects a shift in regulatory focus from broad to detailed, from qualitative to quantitative, from backend penalties to front-end standards.

The 2026 version of the negative list continues the original four major frameworks—product clause statements, product responsibility design, rate setting and actuarial assumptions, and product submission management—but includes multiple additions, deletions, and adjustments in specific items and wording, revealing the deep contradictions faced by the current human insurance industry and the regulatory response strategies. In the macro environment of economic downturn and sustained decline in interest rate centers, the list’s guidance is especially clear.

Understanding this list requires not only examining its content but also grasping the deeper logic behind regulatory guidance under multiple constraints to promote industry standards.

01

Core Content and Era Background

The 2026 version of the negative list continues the overall framework of four major blocks: product clause statements, product responsibility design, rate setting and actuarial assumptions, and product submission management. Since its formation in 2021, this framework has been part of a closed-loop management approach by regulators—covering everything from whether clauses are clear and understandable, whether product design stays true to protection fundamentals, whether pricing assumptions are scientific and prudent, to whether submission materials are complete and compliant. These four dimensions encompass the entire lifecycle of human insurance products from conception to market.

According to publicly available information, the 2025 version of the negative list contained 103 items, with the 2026 version adding, deleting, and adjusting items based on this foundation. Looking at the expansion trend, the core changes in the 2026 list mainly include:

In clause statements, the 2026 version further emphasizes the strict requirement that “consumers must understand.” Problems such as lengthy clauses, unclear key points, and language that is not simple or easy to understand are listed as top issues, reflecting a clear regulatory goal to reduce misleading sales from the source.

Notably, the definition of “pre-existing conditions” in health insurance was clarified in the 2025 list as “diseases known and diagnosed before the effective date of this contract,” with “known” being a newly added key phrase that year. This wording is continued and solidified in the 2026 list, indicating that the regulatory standardization of pre-existing conditions has shifted from a “pilot” phase to a “normal” standard—insurance companies can no longer evade claims by vague descriptions like “health issues existing before application.”

In product responsibility design, the list continues to crack down on product distortion behaviors. After the 2025 list explicitly banned the “incremental form design” in annuities and participating whole life insurance, the 2026 list further tightens restrictions against “cosmetic” changes. Increasing whole life insurance with “increased sum assured” was once a dominant market product, but its “benefit amount growth” design carries inherent risk of interest margin loss—when the projected interest rate and market rates remain inverted, actual investment returns may fall below the promised growth, leading to losses.

Regulators prohibit “incremental whole life” features in annuities and participating policies to prevent risk spillover among similar products. Meanwhile, the standardized requirements for additional premium clauses in universal insurance are further detailed. Since 2024, as market interest rates declined, some companies announced suspension of premium additions in certain universal insurance accounts, causing consumer dissatisfaction.

This issue was first included in the 2025 negative list, and the 2026 version further emphasizes the clarity and management of additional premium clauses. Chen Hui, director of the China Actuarial Science Laboratory at Central University of Finance and Economics, pointed out that the right of consumers to add premiums in universal insurance must be clearly described; unclear clauses can easily lead to disputes.

In rate setting and actuarial assumptions, “reporting and implementation as one” remains a key focus of the 2026 negative list. Of the nine new items added in 2025, five are directly related to this principle. The 2026 list further refines expense management requirements, including prohibitions on: for long-term policies with 10+ years of premium payment, the projected additional expense rate being concentrated in the first two years; high commission and fee ratios in certain channels and policy periods being banned; and submission materials lacking total projected additional and available expenses.

Additionally, “profit testing expenses, sales expenses, and total available expenses exceeding pricing assumptions, or lacking internal logical consistency” are listed as negative items, requiring insurance companies to ensure internal consistency in expense assumptions at the product design stage.

In product submission management, the 2026 list emphasizes the completeness and compliance of submission materials. For example, the 2025 list already disallowed submitting multiple channels’ data (personal agents, internet agents, bank postal agents, brokers) simultaneously, and the 2026 list continues to tighten regulations, demanding higher standards for the cleanup of stale or “zombie” products.

Underlying the changes is the era’s logic: triple constraints layered

The evolution of the 2026 negative list is not isolated but a natural outcome of the combined effects of macroeconomic conditions, interest rate environment, and policy frameworks.

First constraint: declining interest rate center, approaching interest margin loss risk. Since the establishment of a dynamic adjustment mechanism linking the guaranteed interest rate to market rates, the research value of the standard interest rate for ordinary human insurance products has continued to decline. In January 2026, the research value further dropped to 1.89%. Meanwhile, the demonstration interest rate for dividend insurance was also systematically lowered—initially to 3.5% at the start of 2026—to prevent sales misguidance and interest margin risks.

In a declining interest rate environment, the core contradiction for insurers is that the pace of lowering pricing interest rates cannot keep up with market rate declines, leading to the accumulation of interest margin loss risks from high-guarantee products. The crackdown on “incremental whole life” features is fundamentally aimed at facilitating the industry’s shift from fixed-income to floating-income products.

Second constraint: “reporting and implementation as one” shifting from policy advocacy to rigid system. “Reporting and implementation as one” means that the actual handling of policy fees used in product sales must match what is reported to regulators—what is reported must be implemented accordingly.

Since August 2023, regulators have promoted “reporting and implementation as one” across bancassurance and agency channels. The effect has been a roughly 30% reduction in average commission levels industry-wide. However, issues have emerged: some companies, while technically complying, manipulate assumptions and fee structures—such as concentrating long-term policy expense rates in the first two years or hiding total projected expenses outside of filings to evade oversight.

The 2025 and 2026 negative lists have targeted such behaviors for two consecutive years, indicating that “reporting and implementation as one” has deepened from channel fee control to detailed actuarial assumptions and rate setting, with increasingly granular regulation.

Third constraint: consumer rights protection under economic downturn. In 2024, China’s life insurance industry achieved premium income of 4.26 trillion yuan, dominating the insurance sector. Behind this scale are hundreds of millions of policyholders’ vital interests.

As the economy slows and household income growth stalls, consumers become more sensitive to issues like “hard-to-understand” policies, claim difficulties, and clause traps. The 2026 list emphasizes consumer rights protection through clearer clause language, simplified claims documentation, and reasonable waiting periods.

New requirements for insurers: from compliance to refined management

The 2026 negative list introduces three main dimensions of new demands on insurers:

1. From passive compliance to proactive compliance. The negative list is not just a document on paper but a comprehensive “red line” map for product development, clause drafting, rate setting, and submission management. Regulators explicitly require chief actuaries to fulfill their responsibilities diligently, continuously improve professionalism, independence, and ethics, and manage products throughout their lifecycle.

2. From coarse pricing to refined pricing. During the interest rate decline cycle, insurers must establish more scientific pricing mechanisms, avoiding artificial interventions such as adjusting additional expense coefficients or deviating from actual mortality assumptions. This elevates the role of actuarial departments in corporate governance.

3. From sales-driven to product-driven. The deep implementation of “reporting and implementation as one” means that relying on high commissions for channel growth or high yields for customer acquisition is no longer sustainable. Insurers must innovate products and improve service quality to build core competitiveness, encouraging less professional or small-volume channels to phase out.

02

Development History and System Evolution

The evolution of the negative list system reflects the shift in human insurance regulation from passive rectification to proactive standardization, from broad control to fine governance. Its ongoing expansion and adjustments mirror industry risk changes and regulatory thinking upgrades.

Origin: 2018, from special rectification to institutional establishment

2018 was a pivotal year for China’s insurance regulation. In April, the China Banking Regulatory Commission and China Insurance Regulatory Commission merged to form the China Banking and Insurance Regulatory Commission, marking a major reform of the financial regulatory system. Less than a month after its establishment, a special review of human insurance products was launched.

In May 2018, the CBIRC issued a notice on conducting special inspections of human insurance products, requiring a comprehensive review of all existing products’ legality and compliance, including unused “reserve” products and products planned for re-sale after suspension.

This review focused on four behaviors: illegal product development, deviation from insurance fundamentals, unfair practices harming consumers, and marketing gimmicks involving “bizarre” products.

Notably, the CBIRC first published the “Negative List of Human Insurance Product Development and Design,” listing 52 prohibitions across five dimensions: product clause design, responsibility design, rate setting, actuarial assumptions, and submission management.

Why was this negative list introduced in 2018? The immediate trigger was the worsening of sales misguidance and product chaos. In 2017, the original CIRC and its bureaus received 93,111 consumer complaints about insurance, with 97.73% related to disputes over insurance contracts, mainly involving exaggerated responsibilities, hidden terms, late payments, false advertising, etc.

Behind this was consumers’ helplessness in facing lengthy, complex, and opaque contracts—highlighted by the first item on the list: “lengthy clauses, unclear key points, not simple or easy to understand, inconvenient for reading.”

A deeper background involves the regulatory framework established since 2016, including multiple documents aimed at standardizing human insurance operations, such as notices on product duration, actuarial systems, and sales behavior management.

In 2017, the original CIRC issued the “Interim Measures for Traceable Management of Insurance Sales,” requiring recording of sales interactions via audio-visual means to enable replay, query, and accountability. The 2018 negative list was a comprehensive upgrade of these systems.

Development stages: from annual reports to a “living” system

Stage 1 (2018–2020): From special rectification to reporting system. After the 2018 list, the CBIRC established a human insurance product reporting system in 2019. It issued multiple reports on product issues, gradually transforming the negative list from a static document into a dynamic regulatory tool.

This stage’s hallmark was “detect a problem, list a prohibition”—the list’s content grew richer as regulatory practice deepened.

Stage 2 (2021–2022): Formalization and rapid expansion. In January 2021, the CBIRC issued the 2021 version of the negative list, establishing the four-block framework with 73 items, which remains in use. The 2022 list expanded to 82 items, with faster growth.

This period coincided with major product structure adjustments—since 2019, ordinary human insurance products’ guaranteed interest rates declined steadily, while fixed-income products like increasing whole life insurance remained dominant. The regulator used rapid iteration of the negative list to correct market issues precisely.

Stage 3 (2023–2024): Slower expansion, more refined adjustments. The 2023 list increased to 90 items, and 2024 to 94, with more detailed restrictions, especially on expense and assumption management, including prohibitions on manipulating assumptions and hiding costs.

During this period, regulation shifted from broad bans to more precise controls.

Stage 4 (2025–2026): Maturity and full-chain penetration. The 2025 list exceeded 100 items, reaching 103, with 5 directly related to “reporting and implementation as one.” The 2026 list’s adjustments mark the system’s maturity.

From 52 items to over 100, the expansion of the negative list is a micro-history of human insurance regulation—documenting product distortions, sales misguidance, inflated rates, and the evolution from backend penalties to front-end standards, from broad control to fine governance.

Industry and policy background at each stage

2016–2018: Risk exposure of short- and medium-term products. During this period, universal and investment-linked products expanded rapidly, with some companies evading regulation through “long-term short-term” strategies and high settlement rates, accumulating liquidity and interest margin risks.

The original CIRC issued multiple documents to curb rapid growth, with the 2018 negative list as the culmination of tightened regulation.

2019–2021: Decline in guaranteed interest rates and product transformation. In 2019, the upper limit of guaranteed interest rates for ordinary products was lowered from 4.025% to 3.5%, initiating a downward trend. Over the next few years, the rate continued to decline to 3.0% and then 2.5%.

During this period, increasing whole life insurance with “benefit growth” became mainstream but also exposed deep risks like interest margin loss and sales misguidance. The negative list kept expanding to correct market issues.

2022–2024: “Reporting and implementation as one” from pilot to full implementation. As bank channels rapidly expanded, high commissions became problematic. From August 2023, regulators promoted “reporting and implementation as one” across channels, with the negative list adding many related restrictions on expenses, assumptions, and submission management, aligning with the policy’s systemic push.

Post-2025: Fine regulation under normalized interest rates. With the establishment of dynamic adjustment mechanisms, guaranteed interest rates for ordinary products have fallen to 2%, and dividend insurance with “low guarantees + high floating” has become dominant.

In this environment, regulation shifted focus from “preventing overheating” to “preventing risks”—such as interest margin loss, expense margin spread, and product distortion. The 2025 and 2026 lists embody this regulatory philosophy.

03

Conclusion: A Clear Evolutionary Path

Since its inception in 2018, the human insurance product negative list has gone through seven years. From 52 prohibitions to over 100, from ad hoc rectification to a normalized regulatory tool, this evolution reflects China’s insurance regulation transforming from “campaign-style governance” to “systematic governance.”

Deeper still is the shift in regulatory thinking: from focusing on “backend” issues—problems after products are sold—to emphasizing “front-end” control—drawing red lines during product design, clause drafting, and rate setting to reduce problematic products at the source. The negative list embodies this “source governance” concept.

The release of the 2026 list coincides with China’s “14th Five-Year Plan” start and a critical period for high-quality development of the insurance industry under low interest rates. As dividend insurance replaces increasing whole life insurance as the mainstream, and “reporting and implementation as one” deepens from channels to actuarial assumptions, and consumer rights protection becomes quantifiable, the institutional significance of the negative list far exceeds its words.

For insurers, this is both a stress test and an ability assessment. Those with genuine product development expertise and robust compliance systems will gain a competitive advantage in the industry reshuffle.

For consumers, a more refined negative list means each policy they purchase undergoes stricter scrutiny—perhaps the greatest institutional value of this list.