Short-term health insurance payout ratios fall below 40%, with P&C and life insurers diverging

By WEMONEY Research | Wen Xin

The payout ratio for short-term health insurance presents a persistent dilemma: if too high, insurers struggle to remain solvent; if too low, policyholders fail to receive adequate protection. Data released for the first half of 2026 reveals a concerning picture: the median comprehensive payout ratio remains low and has declined further compared to the same period last year.

Key Findings at a Glance

• Among 54 property & casualty (P&C) insurers disclosing data, the median payout ratio stood at 39.32%, down from approximately 43% in H1 2025.
• Among 73 life & health (L&H) insurers, the median was 36.19%, also lower than the roughly 42% recorded a year earlier.
• Both medians have fallen below the 40% threshold, significantly trailing the industry-recognized reasonable range of 50% to 80%.

Only a handful of companies fall within the target range:

• P&C insurers: Approximately 12 companies (less than one-quarter of the group).
• L&H insurers: Approximately 10 companies (also less than one-quarter).

Conversely, the majority report payout ratios below 50%:

• P&C insurers: 34 companies (63%).
• L&H insurers: 54 companies (74%).

This means that for every four companies disclosing data, nearly three pay out less than half of the premiums they collect.

This low payout environment coincides with a slowdown in overall health insurance growth. In H1 2026, the insurance industry recorded total original premium income of 3.86 trillion yuan, up 3.3% year-on-year. Health insurance premiums reached 643.8 billion yuan, a 3.45% increase. However, a divergence emerged: P&C insurers saw health insurance premiums grow by 15.3%, while L&H insurers experienced a 0.67% decline.

The key question remains: Is the declining median payout ratio a sign of effective risk control, or a symptom of premium revenue pressure?

1. The Payout Ratio Landscape: Two Medians and a Concentrated Distribution

A total of 127 companies across both P&C and L&H sectors disclosed their comprehensive payout ratios, covering the vast majority of institutions offering short-term health insurance. The ratio is calculated as claims paid plus the change in outstanding claims reserves, divided by net earned premiums (after reinsurance). This methodology means the ratio can fluctuate with reserve provisioning cycles.

Distribution by Sector

Property & Casualty Insurers (54 companies):

• 10% to 50%: 28 companies (51.9% of total) – the most densely populated range.
• Below 10%: 6 companies (including 2 with negative ratios).
• 50% to 100%: 16 companies.
• Above 100%: 4 companies.

Life & Health Insurers (73 companies):

• 10% to 50%: Nearly 70% of companies.
• Below 10%: 8 companies (including 5 with negative ratios).
• 50% to 100%: 14 companies.
• Above 100%: 4 companies.

Trend Analysis

The downward trend is clear:

• Over 70% of P&C insurers saw their payout ratios decline year-on-year.
• Over 47% of L&H insurers experienced a decline.
• The median payout ratio for P&C insurers fell by approximately 3.7 percentage points.
• The median for L&H insurers dropped by approximately 5.8 percentage points, a steeper decline.

The combination of a falling median and a concentration of low ratios suggests a common strategy: suppressing payouts through conservative pricing and high deductibles, rather than expanding coverage.

2. Extreme Values: Causes Behind the Outliers

Highest Payout Ratios – P&C Insurers

| Company | Payout Ratio | |---|---| | Yellow River P&C Insurance | 394.87% | | CCB P&C Insurance | 161.83% | | Kabbage P&C Insurance | 135.21% | | Huahai P&C Insurance | 104.28% | | Zhongcheng P&C Insurance | 93.38% |

A common characteristic among these companies is their small short-term health insurance business volume. A ratio of 394.87% is an extreme outlier, typically seen in nascent or concentrated claims periods. The three companies exceeding 100% (CCB, Kabbage, Huahai) also fit the pattern of small scale leading to high volatility.

Highest Payout Ratios – L&H Insurers

| Company | Payout Ratio | |---|---| | Guobao Life | 199.05% | | Dingcheng Life | 133.93% | | PICC Life | 107.68% | | Bank of Sino Life | 104.79% | | Aixin Life | 95.00% |

• Guobao Life has historically high ratios: 140.29% in H1 2024 and 217.65% in H1 2025, showing significant volatility.
• PICC Life, a major insurer, reported 107.68%, a notable figure given its ratios of 55.83% (H1 2024) and 75.82% (H1 2025), marking three consecutive years of increase.

A payout ratio exceeding 100% indicates that claims payments and reserve provisions have surpassed earned premiums, meaning the business line is in an underwriting loss position.

Lowest Payout Ratios – P&C Insurers

| Company | Payout Ratio | |---|---| | Xin'an Auto P&C Insurance | -43.56% | | China Railway P&C Insurance | -4.44% | | Everest P&C Insurance | 0.71% | | Fubon P&C Insurance | 6.67% | | Liberty P&C Insurance | 8.48% |

Bohai P&C Insurance also reported a ratio below 10%. This means for every 100 yuan in premiums collected, less than 10 yuan is paid out in claims.

Note on Negative Ratios: Negative values are primarily driven by the release of outstanding claims reserves, not by an actual absence of claims. When reserves set aside in prior periods are reversed in the current period, the numerator becomes negative, distorting the indicator. This does not mean the underwriting side is risk-free.

Lowest Payout Ratios – L&H Insurers

| Company | Payout Ratio | |---|---| | Swiss Re Life Insurance China | -896.67% | | (Other negative-ratio companies include: Dajia Pension, Hongkang Life, Ruihua Health, Haibao Life) | |

• Swiss Re Life Insurance China recorded the most extreme value across all samples. Its short-term health insurance business is minimal, with net earned premiums (after reinsurance) of only 22,000 yuan in H1 2026, while the change in outstanding claims reserves was -197,700 yuan.
• The other four companies with negative ratios share a similar profile: small existing business, minimal current earned premiums, and reserve releases exceeding actual claims.

Notable Case: HSBC Life has maintained consistently low ratios: 8.77% (2023), 7.29% (2024), and 11.61% (2025), remaining below 12% for three consecutive years.

Summary of Extremes

The picture is clear: at one end are small-scale companies in their early stages or facing concentrated claims, with ratios often doubling. At the other end are companies with minimal existing business, where reserve releases produce negative ratios. Companies that maintain stable ratios within the reasonable range are a minority. By the standard measure, fewer than one-fifth of all disclosing companies fall within the 50% to 80% range.

3. The Other Side of Low Payouts: Adverse Selection and Two Growth Stories

A low payout ratio is not necessarily good news.

Impact on Consumers

For policyholders, a low payout ratio means limited protection value. High deductibles, narrow coverage scopes, and stringent claims reviews can leave insured individuals paying premiums without receiving benefits. Analysts warn that low payout ratios can also trigger adverse selection: high-risk individuals are more likely to purchase insurance, while low-risk individuals drop out due to lack of use. This degrades the risk pool, potentially driving up payout levels and creating a vicious cycle of high risk, high payouts, high premiums, and even more high-risk participants.

The Two Growth Stories

To understand the declining payout ratios, we must examine the two sectors' different trajectories.

Overall Industry (H1 2026):

• Total original premium income: 3.86 trillion yuan (+3.3% YoY)
• Total claims and benefits paid: 1.40 trillion yuan (+3.8% YoY)
• P&C insurers: 984.6 billion yuan (+2.1% YoY)
• L&H insurers: 2.8716 trillion yuan (+3.6% YoY)
• Foreign insurers: Growth outpaced the industry average, with market share rising to 9.7%.

Health Insurance Breakdown (H1 2026):

• P&C insurers: 185.5 billion yuan (+15.3% YoY)
• L&H insurers: 458.3 billion yuan (-0.67% YoY)

In absolute terms, the health insurance sector added 21.484 billion yuan in new premiums. P&C insurers contributed 24.515 billion yuan in growth, while L&H insurers saw a 3.031 billion yuan decline. P&C insurers accounted for all of the sector's growth, while L&H insurers lagged.

Why the Divergence?

P&C Insurers: High growth is directly linked to their strategic shift toward non-auto insurance lines (liability, agriculture, health). Non-auto insurance now accounts for over 50% of their portfolio. Short-term health insurance products, particularly million-dollar medical plans, have gained traction due to their cost-effectiveness and low entry barriers. Combined with a low base from the previous year, this drove the 15.3% growth rate, approximately 6 percentage points higher than in H1 2025.

L&H Insurers: The decline is more structural. In a low-interest-rate environment, consumer allocation has shifted toward savings-type products. For example, participating (dividend) insurance premiums surged 94.4% year-on-year in H1 2026. Demand for protection-type products has been slow to recover, and long-term health insurance remains in a repair phase. Combined with a high base effect, short-term health insurance premiums face pressure.

Regulatory and Supply-Side Factors

Regulatory oversight has also intensified in areas such as renewal wording for short-term health insurance and claims rules for expense-reimbursement products. On the supply side, new products targeting sub-healthy populations, chronic disease patients, and the elderly are being introduced, alongside expanded offerings in long-term medical and nursing insurance.

Why L&H Payout Ratios Fell More

The steeper decline in the median payout ratio for L&H insurers can be attributed to:

• Slower premium growth in the denominator.
• Active business contraction by some companies, shedding unprofitable lines.
• Tighter underwriting and screening of risks.

Analysts conclude that the declining payout ratio reflects both proactive risk control and passive pressure from premium revenue constraints.

Implications and Outlook

For Consumers

Payout ratio data provides a practical reference. For million-dollar medical plans, high deductibles mean most routine medical expenses do not trigger claims, resulting in naturally low payout ratios. However, if a short-term health insurance product consistently reports a payout ratio below 20%, the alignment between its pricing and actual coverage warrants scrutiny. How much real protection does such a policy offer against genuine medical expenses?

For the Industry

The immediate priority is to strike a balance between controlling payouts and enhancing protection. Through refined underwriting and operational efficiency, the industry should aim to bring payout ratios back into a reasonable range, ensuring that protection translates into actual claims paid.