Fitch Ratings reports that China’s non-life insurance sector maintained strong financial stability during the first quarter of 2025. This stability supported consistent premium growth and improved underwriting performance.
The sector continued to benefit from rising sales of new-energy vehicles, which boosted motor insurance premiums despite ongoing challenges from tariff-related trade tensions.
By the end of March 2025, the sector’s comprehensive solvency ratio stood at 239% under the China Risk-Oriented Solvency System (C-ROSS), well above the regulatory minimum.
This reflects a substantial capital buffer that supports ongoing expansion.
Fitch forecasts steady premium growth throughout 2025, supported by government policies aimed at increasing consumer spending and offering subsidies for domestic consumption.
These measures have already contributed to the acceleration of motor insurance premium growth, despite regulatory controls on premium rate increases.
Non-motor insurance, particularly accident and health insurance, grew faster than motor lines in early 2025. Total non-life premiums rose by 5.2% year-on-year as of April 2025.
Fitch expects reduced underwriting volatility in non-motor lines such as employer liability and workplace safety liability insurance.
This outlook is driven by regulatory efforts to align rate policies, manage acquisition expenses, and discourage excessive market competition.
Although low interest rates continue to limit investment income—since insurers often hold short-duration fixed-income assets—most major companies improved operational profitability during the first quarter.
They achieved this by maintaining stable claims ratios, improving pricing strategies, increasing operational efficiency, and controlling expenses. As a result, expense ratios at larger insurers slightly declined.
Smaller insurers continue to report combined ratios above 100%. These companies are under pressure to improve pricing methods and operational performance.
Regulatory requirements mandating alignment between statutory reporting and actual underwriting in motor insurance will continue to support stability in that segment.
The strong solvency margin across the sector offers a buffer against underwriting risks and supports further growth. Despite recent regulatory changes lowering capital charges on equity investments, insurers are expected to remain cautious in increasing equity allocations due to the short-tail structure of many liabilities.
Insurers with weaker earnings will need to raise capital through equity issuance or subordinated debt to maintain adequate financial strength.
China’s Ministry of Emergency Management reported over CNY 400 bn in economic losses from natural disasters in 2024, including typhoons, floods, and droughts.
In response, Fitch expects insurers to focus on improving catastrophe modelling, managing exposure levels carefully, and securing adequate reinsurance coverage to address these risks effectively.
