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

Overview: A Concerning Picture Emerges

Short-term health insurance faces a delicate balancing act: payout ratios that are too high strain insurers, while ratios that are too low fail to deliver on consumer protections. Data released for the first half of 2026 reveals a troubling 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 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 P&C companies and 10 life insurance companies reported payout ratios within the 50% to 80% range—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%). In other words, nearly three out of every four disclosing institutions paid out less than half of the premiums they 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, a divergence emerged: P&C companies saw health insurance premiums grow by 15.3%, while life insurance companies experienced a 0.67% decline. 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 P&C and life insurance sectors disclosed their comprehensive payout ratios, covering the vast majority of institutions offering short-term health insurance. Under the disclosure methodology, the comprehensive payout ratio uses post-reinsurance earned premiums 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 reserve provisioning schedules.

Distribution by Sector

Property & Casualty 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%.
• Only 4 companies exceeded 100%.

Life Insurance Companies:

• Nearly 70% of the 73 companies fell within 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 P&C companies and over 47% of life insurance companies saw their payout ratios decline. Based on disclosed data, 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 median and concentrated low range suggest a common approach: relying on conservative pricing and high deductibles to suppress payouts rather than expanding coverage.

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

Highest Payout Ratios

Property & Casualty Insurance Companies (Top 5): | 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 claims periods. The three companies exceeding 100%—CCB Property Insurance, Kaben Property Insurance, and Huahai Property Insurance—also follow the pattern of small scale and high volatility.

Life Insurance Companies (Top 5): | Company | Payout Ratio | |---|---| | Guobao Life Insurance | 199.05% | | Dingcheng Life Insurance | 133.93% | | PICC Life Insurance | 107.68% | | Zhonghe 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 increases.

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

Lowest Payout Ratios

Property & Casualty Insurance Companies (Bottom 5): | Company | Payout Ratio | |---|---| | Xin'an Auto Insurance | -43.56% | | China Railway Property Insurance | -4.44% | | Zhufeng 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 claims payments. When reserves over-provisioned in prior periods are reversed in the current period, the numerator becomes negative, distorting the indicator. This does not necessarily mean the underwriting side is risk-free.

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

Ruitai Life Insurance's -896.67% is the most extreme value across all samples. Its short-term health insurance business is very small, with post-reinsurance 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 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.

When examining both ends of the spectrum, the picture becomes clear: on one side are small-scale companies in early business stages or concentrated claims periods, with payout ratios often doubling; on the other side are companies with minimal existing business, where reserve releases produce negative ratios. Institutions that maintain stable 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 scopes, and stringent 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 payout levels higher, creating a cycle of high risk, high payouts, high premiums, and more high-risk individuals.

Understanding the Causes: Two Different Growth Trajectories

The reasons behind declining payout ratios can be traced to the different growth stories of the two sectors.

Industry Overview:

• First half of 2026: Total original premium income: 3.86 trillion yuan, up 3.3% year-on-year.
• Claims and benefit payments: 1.40 trillion yuan, up 3.8% year-on-year.
• P&C companies: Original premium income of 984.6 billion yuan, up approximately 2.1%.
• Life insurance companies: 2.8716 trillion yuan, up approximately 3.6%.
• Foreign-invested insurers: Business growth exceeded the industry average, with market share rising to 9.7%.

Health Insurance Breakdown:

• P&C companies: Premiums of 185.5 billion yuan, up 15.3% year-on-year.
• Life insurance companies: Premiums of 458.3 billion yuan, down 0.67% year-on-year.

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 reduction of 3.031 billion yuan year-on-year. P&C companies single-handedly drove all the growth in health insurance, while life insurance companies lagged behind.

P&C Companies: High Growth Driven by Non-Auto Strategy

The high growth in P&C companies is directly linked to their strategic shift toward non-auto insurance. In recent years, P&C insurers have aggressively developed 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 cost-effectiveness and low entry barriers. Combined with a low base in the same period last year, this segment achieved high 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: Structural Headwinds

The decline in life insurance companies 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 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 repair phase. Combined with a high base, health insurance premiums face short-term pressure.

Regulatory Developments

Regulatory oversight is also advancing. In recent years, areas such as renewal wording for short-term health insurance and claims rules for expense-compensation products have been key focuses of regulatory attention. 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.

Why Life Insurance Companies Saw a Larger Decline

This context explains why the median payout ratio for life insurance companies fell more than that for P&C companies: slower premium growth on the denominator side, combined with some companies actively shrinking loss-making businesses and strengthening underwriting screening, collectively pushed payout levels lower. Some analysts suggest 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 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.