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

Overview: Low Payout Ratios Raise Concerns

The payout ratio for short-term health insurance presents a dilemma: too high and insurers struggle; too low and consumers 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.

According to statistics, among 54 property insurance companies that disclosed their comprehensive payout ratios, the median stood at 39.32%, down from approximately 43% in the first half of 2025. Among 73 life insurance companies, the median was 36.19%, also lower than the roughly 42% recorded a year earlier. Both medians have fallen below 40%, significantly trailing the industry-recognized reasonable range of 50% to 80%.

Very few institutions meet the benchmark. Only about 12 property insurers and 10 life insurers reported payout ratios within the 50% to 80% range, representing less than one-quarter of each group. Conversely, the majority of companies reported ratios below 50%: 34 property insurers (63%) and 54 life insurers (74%). This means that for every four disclosing institutions, nearly three pay out less than half of the premiums collected.

This low payout ratio backdrop coincides with a slowdown in overall health insurance growth. In the first half of 2026, the insurance industry recorded total original premium income of 3.86 trillion yuan, a year-on-year increase of 3.3%. Health insurance premiums reached 643.8 billion yuan, up 3.45% year-on-year. However, property insurers saw health insurance premiums grow by 15.3%, while life insurers experienced a 0.67% decline—two distinctly different trajectories. The question remains: does the declining median payout ratio reflect effective risk control, or is it a symptom of premium pressure?

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

A total of 127 companies across the property and life insurance sectors disclosed this indicator, covering the vast majority of institutions operating short-term health insurance. Under the disclosed methodology, the comprehensive payout ratio uses earned premiums after reinsurance as the denominator, with the numerator being the sum of claims paid and the change in outstanding claims reserves. This means the indicator can fluctuate with the timing of reserve provisions.

Property Insurance Companies

• 28 companies (51.9% of the total) reported payout ratios between 10% and 50%—the most densely populated range.
• 6 companies reported ratios below 10%, including 2 with negative values.
• 16 companies reported ratios between 50% and 100%.
• 4 companies exceeded 100%.

Life Insurance Companies

• Nearly 70% of the 73 companies were concentrated in the 10% to 50% range.
• 8 companies reported ratios below 10%, including 5 with negative values.
• 14 companies reported ratios between 50% and 100%.
• 4 companies exceeded 100%.

Trend Analysis

The trend is downward. Compared to the same period last year, over 70% of property insurers and over 47% of life insurers saw their payout ratios decline. Based on disclosed data, the median payout ratio for property insurers fell by approximately 3.7 percentage points year-on-year, while life insurers saw a larger decline of about 5.8 percentage points. The declining median and concentrated low range suggest a common approach: suppressing payouts through conservative pricing and high deductibles rather than expanding coverage.

2. Extreme Values: Causes Behind Anomalies and Small-Scale Volatility

Highest Payout Ratios – Property Insurers

| Company | Payout Ratio | |---|---| | Yellow River Property Insurance | 394.87% | | CCB Property Insurance | 161.83% | | Kaben Property Insurance | 135.21% | | Huahai Property Insurance | 104.28% | | Zhongcheng Property Insurance | 93.38% |

These companies share a common characteristic: their short-term health insurance businesses are generally small in scale. A 394.87% payout ratio is an outlier at any business volume, typically occurring during initial operations or concentrated claims periods. The three companies exceeding 100%—CCB Property, Kaben Property, and Huahai Property—also follow the pattern of small scale and high volatility.

Highest Payout Ratios – Life Insurers

| Company | Payout Ratio | |---|---| | Guobao Life Insurance | 199.05% | | Dingcheng Life Insurance | 133.93% | | PICC Life Insurance | 107.68% | | Cigna & CMB Life Insurance | 104.79% | | Aixin Life Insurance | 95.00% |

Guobao Life Insurance has consistently reported high short-term health insurance payout ratios: 140.29% in the first half of 2024 and 217.65% in the first half of 2025, showing significant volatility.

PICC Life Insurance, as a large company, warrants particular attention with a 107.68% payout ratio. Its ratios were 55.83% in the first half of 2024 and 75.82% in the first half of 2025, marking three consecutive years of increase.

A payout ratio exceeding 100% means that current claims payments and reserve provisions have surpassed earned premiums, indicating underwriting losses in that business line.

Lowest Payout Ratios – Property Insurers

| Company | Payout Ratio | |---|---| | Xin'an Auto Property Insurance | -43.56% | | China Railway Property Insurance | -4.44% | | Zhufeng Property Insurance | 0.71% | | Fubon Property Insurance | 6.67% | | Liberty Property Insurance | 8.48% |

Bohai Property Insurance also reported a ratio below 10%. This means for every 100 yuan in premiums collected, claims payments are less than 10 yuan.

Negative values primarily result from the release of outstanding claims reserves rather than exceptionally low actual claims payments. When reserves set aside in previous 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 – Life Insurers

| Company | Payout Ratio | |---|---| | Ruitai Life Insurance | -896.67% | | (Others: Dajia Pension, Hongkang Life, Ruihua Health, Haibao Life) | Negative values |

Ruitai Life Insurance recorded the most extreme value across all samples at -896.67%. Its short-term health insurance business is very small, with earned premiums after reinsurance of only 22,000 yuan in the first half of the year, while the change in outstanding claims reserves was -197,700 yuan. The other four companies with negative values share similar characteristics: minimal existing business, very low current earned premiums, and reserve releases exceeding actual claims payments.

Also noteworthy is HSBC Life Insurance, which reported short-term health insurance payout ratios of 8.77%, 7.29%, and 11.61% for 2023, 2024, and 2025 respectively—remaining below 12% for three consecutive years.

Summary of Extremes

The picture becomes clear when examining both ends of the spectrum: on one side, small-scale companies in their initial or concentrated claims phases, with payout ratios often doubling; on the other, companies with minimal existing business, where reserve releases produce negative values. Institutions that consistently maintain payout ratios within the reasonable range are actually the minority—by the benchmark standard, companies falling within the 50% to 80% range account for less than one-fifth of all disclosing institutions.

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

Low payout ratios are not necessarily good news. For consumers, excessively low ratios mean inadequate protection—high deductibles, narrow coverage, and stricter claims reviews may leave policyholders paying premiums without receiving benefits. Some analysts point out that low payout ratios can also trigger adverse selection: high-risk individuals are more willing to purchase insurance, while low-risk individuals exit due to lack of use, deteriorating the risk pool and ultimately pushing up payout levels, creating a cycle of high risk, high payouts, high premiums, and more high-risk individuals.

The causes of declining payout ratios can be traced to two different growth stories.

Industry Overview

In the first half of 2026:

• Total original premium income: 3.86 trillion yuan, up 3.3% year-on-year
• Total claims and benefit payments: 1.40 trillion yuan, up 3.8% year-on-year
• Property insurers' original premium income: 984.6 billion yuan, up approximately 2.1%
• Life insurers' original premium income: 2.8716 trillion yuan, up approximately 3.6%
• Foreign insurers' business growth exceeded the industry average, with market share rising to 9.7%

Health Insurance Breakdown

• Property insurers' health insurance premiums: 185.5 billion yuan, up 15.3%
• Life insurers' health insurance premiums: 458.3 billion yuan, down 0.67%

In terms of incremental growth, health insurance added 21.484 billion yuan in new premiums in the first half of the year. Property insurers contributed 24.515 billion yuan of this increase, while life insurers saw a year-on-year decline of 3.031 billion yuan. Property insurers drove all the growth in health insurance, while life insurers lagged behind.

Property Insurers: High Growth Driven by Non-Auto Strategy

Property insurers' high growth is directly linked to their strategic shift toward non-auto insurance. In recent years, property insurers have been actively developing liability insurance, agricultural insurance, health insurance, and other non-auto lines, with the non-auto share now exceeding 50%. Short-term health insurance products, represented by million-yuan medical insurance, have continued to gain volume due to their high cost-effectiveness and low entry barriers. Combined with a low base in the same period last year, the first half of 2026 showed strong growth, with health insurance business growth approximately 6 percentage points higher than the same period last year.

Life Insurers: Structural Decline

The decline in life insurers' health insurance premiums is more structural. In a low-interest-rate environment, residents' insurance allocations have shifted more toward savings-type products. For example, dividend insurance original premium income grew by 94.4% year-on-year in the first half of the year. Demand for protection-type products has recovered slowly, and long-term health insurance business remains in a recovery phase. Combined with a high base, health insurance premiums face short-term pressure.

Regulatory Developments

Regulatory oversight is also progressing. Areas such as renewal wording for short-term health insurance and claims rules for expense-compensation products have been key focuses of regulatory attention in recent years. On the supply side, new products targeting people with pre-existing conditions, chronic diseases, and the elderly, as well as the expansion of long-term medical insurance and nursing insurance, are adding to the market.

Explaining the Divergence

This context explains why the decline in the median payout ratio for life insurers is greater than that for property insurers: slower premium growth on the denominator side, combined with some companies actively shrinking loss-making businesses and strengthening underwriting screening, has collectively pushed down payout levels. Some analysts conclude that the declining payout ratio reflects both proactive risk control measures and the passive drag of premium pressure.

Implications for Consumers and the Industry

For ordinary consumers, payout ratio data provides a practical reference. Taking million-yuan medical insurance as an example, the high-deductible design means most routine medical visits do not trigger claims, resulting in naturally low payout ratios. However, if a short-term health insurance product's payout ratio remains consistently below 20%, the alignment between its pricing and coverage deserves re-examination—how much protection does this policy actually provide against real medical expenses?

For the industry, the immediate priority is to find a balance between controlling payouts and enhancing protection. Through refined underwriting and operations, the goal should be to bring payout ratios back into a reasonable range, ensuring that protection translates into actual claims payments.