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

Overview: A Troubling Picture Emerges

Short-term health insurance faces a delicate balancing act: payout ratios that are too high strain insurers, while those that are too low fail to deliver on consumer protections. Data released for the first half of 2026 reveals a concerning reality: the median comprehensive payout ratio remains low and has declined further compared to the same period last year.

According to statistics, among 54 property and casualty (P&C) insurance companies that disclosed their comprehensive payout ratios, the median stood at 39.32%, down from approximately 43% in the same period 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 lagging behind the industry-recognized reasonable range of 50% to 80%.

Very few institutions meet the benchmark. Only about 12 P&C companies and 10 life insurance companies 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 P&C companies (63%) and 54 life insurance companies (74%). This means that for every four disclosing institutions, nearly three pay out less than half of the premiums collected.

This low payout ratio environment 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, P&C companies saw health insurance growth of 15.3%, while life insurance companies experienced a decline of 0.67%, creating two distinctly different trajectories. The question remains: is the declining median payout ratio a result of improved risk control, or a symptom of premium pressure?

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

A total of 127 companies across the P&C and life insurance sectors disclosed this indicator, covering the vast majority of institutions operating short-term health insurance. Under the disclosed calculation method, the comprehensive payout ratio uses reinsurance-adjusted earned premiums as the denominator, with the numerator being the sum of claim payments and changes in outstanding claims reserves. This means the indicator can fluctuate with reserve provisioning schedules.

Distribution by Sector

Property & Casualty 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%
• Only 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%

Year-on-Year Trends

The trend is downward. Compared to the same period last year:

• Over 70% of P&C companies saw their payout ratios decline
• Over 47% of life insurance companies experienced declines

By calculation, the median payout ratio for P&C companies fell by approximately 3.7 percentage points year-on-year, while life insurance companies saw a larger decline of about 5.8 percentage points. The declining medians and concentrated low ranges point to a common strategy: 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 — P&C Companies

| Company | Payout Ratio | |---|---| | Yellow River Insurance | 394.87% | | CCB Property Insurance | 161.83% | | Kaben Property Insurance | 135.21% | | Huahai Property Insurance | 104.28% | | Zhongcheng 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 business stages or concentrated claim periods. The three companies exceeding 100% — CCB Property Insurance, Kaben Property Insurance, and Huahai Property Insurance — also follow the pattern of small scale with large fluctuations.

Highest Payout Ratios — Life Insurance Companies

| 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's short-term health insurance payout ratio has been persistently high, reaching 140.29% in the first half of 2024 and 217.65% in the first half of 2025, showing significant volatility.

PICC Life Insurance's 107.68% ratio is particularly noteworthy given its status as a large company. 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 increases.

A payout ratio exceeding 100% means that current claim payments and reserve provisions have surpassed earned premiums, placing the business line in an underwriting loss position.

Lowest Payout Ratios — P&C Companies

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

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

Negative values primarily result from the release of outstanding claims reserves rather than exceptionally low actual claim payments. When reserves over-provisioned 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 Insurance Companies

| Company | Payout Ratio | |---|---| | Ruitai Life Insurance | -896.67% | | Dajia Pension Insurance | Negative | | Hongkang Life Insurance | Negative | | Ruihua Health Insurance | Negative | | Haibao Life Insurance | Negative |

Ruitai Life Insurance's -896.67% is the most extreme value in the entire sample. Its short-term health insurance business is very small, with reinsurance-adjusted premiums 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 show similar patterns: minimal existing business, extremely low current earned premiums, and reserve releases exceeding actual claim 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.

When the extremes are viewed together, the payout picture for short-term health insurance becomes clear: on one end are small-scale companies in their initial or concentrated claim periods, with ratios often doubling; on the other end are companies with minimal existing business, where reserve releases pull ratios into negative territory. Institutions that consistently maintain payout ratios within the reasonable range are actually the minority — by calculation, 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 insufficient protection value. High deductibles, narrow coverage scopes, and stringent claims reviews can 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 drop out due to lack of use, deteriorating the risk pool and potentially pushing up payout levels — creating a cycle of high risk, high payouts, high premiums, and even more high-risk participants.

Two Growth Stories

The causes of declining payout ratios can be traced to two different growth narratives across the two sectors.

Industry Overview:

• First half of 2026: Total original premium income: 3.86 trillion yuan (+3.3% year-on-year)
• Claim payments and benefits: 1.40 trillion yuan (+3.8% year-on-year)
• P&C companies: 984.6 billion yuan (+2.1%)
• Life insurance companies: 2.8716 trillion yuan (+3.6%)
• Foreign insurers: Business growth above industry average, market share rising to 9.7%

Health Insurance Breakdown:

• P&C companies: 185.5 billion yuan (+15.3%)
• Life insurance companies: 458.3 billion yuan (-0.67%)

In terms of incremental growth, health insurance added 21.484 billion yuan in new premiums in the first half of the year. P&C companies contributed 24.515 billion yuan of this increase, while life insurance companies saw a year-on-year decrease of 3.031 billion yuan. P&C companies single-handedly drove all the growth in health insurance, while life insurance companies lagged behind.

Why the Divergence?

P&C Companies: High growth is directly linked to the strategic shift toward non-auto insurance. In recent years, P&C companies have been aggressively developing liability insurance, agricultural insurance, health insurance, and other non-auto lines, with non-auto insurance now accounting for over 50% of their business. Short-term health insurance products like million-yuan medical insurance, known for their cost-effectiveness and low entry barriers, have continued to gain volume. Combined with a low base in the same period last year, this segment showed strong growth in the first half of the year, with health insurance business growth approximately 6 percentage points higher than the same period last year.

Life Insurance Companies: The decline is more structural. In a low-interest-rate environment, residents' insurance allocations have shifted more toward savings-type products. For example, dividend-type insurance saw original premium income grow 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 repair phase. Combined with a high base, health insurance premiums face short-term pressure.

Regulatory and Supply-Side Factors

Regulatory oversight has also been advancing. Areas such as renewal wording for short-term health insurance and claim rules for expense-reimbursement products have been key regulatory focus areas 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.

These factors help explain why the decline in the median payout ratio for life insurance companies is larger than for P&C companies: slower premium growth in the denominator, combined with some companies actively shrinking loss-making business lines and strengthening underwriting screening, have 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 below 20% for an extended period, 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 delivering 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 paid.