Premium rank is the wrong scoreboard for a mid-size life insurer

Every month China's life insurers can see where they stand in premium income against their competitors. Executives quote the position in internal meetings, shareholders ask about it, and bank partners consult it when deciding whose products to place in front of customers. For a mid-size insurer the table is a source of pride and anxiety in roughly equal measure.

I have come to believe that for an insurer of our size, premium rank is close to useless as a measure of progress and harmful as a goal. It measures money the insurer will owe back with interest, not value created. It rewards the products and channels that consume the most capital for the least value. And it is easiest to improve through exactly the business a falling-rate environment makes most dangerous: single-premium savings sold through bank branches.

How the premium table shapes behaviour

The mechanism is simple. Premium can be raised quickly through banks, whose customers include many savers looking for something safer than equities and better paid than deposits. A bank branch can sell a single-premium savings policy of several hundred thousand yuan in one visit, a speed no agency force can match. An insurer that wants to climb the table will therefore turn to the bank channel, and within it to single-premium products with high early cash values.

The banks understand this. A mid-size insurer with ambitions for its rank competes with much larger insurers for the same shelf, and the bank's terms reflect that. Before the regulator required, from 2023, that the commission an insurer pays a bank match the expenses filed for the product, the competition took the form of fees. It now takes quieter forms: richer product features, higher values at early surrender dates and insurer staff stationed in bank branches.

At Jiangheng Life we lived inside this logic for years. At the end of 2023 we had thirty-six bank partners and RMB 12.1 billion of bank-channel first-year premium, the most in our history. Eighty-one per cent of it was single premium. When my team measured each partnership separately, eleven of the thirty-six earned more than their cost of capital.

What a bank counter really costs

A partner-level view needs four numbers. The first is new business value after commission, which captures what the business is worth to shareholders at the point of sale. The second is persistency at thirteen and twenty-five months, because a savings policy surrendered early loses the insurer money that its value calculation assumed it would keep. The third is the solvency capital the business consumes, since single-premium savings carry heavy interest-rate and market risk under China's risk-oriented solvency system. The fourth is the balance between single and regular premium, which shows whether a bank is helping an insurer build a lasting relationship with a customer or selling that customer a deposit substitute.

Together these numbers gave an uncomfortable picture. Our largest partners by premium were not our most valuable. Several city and rural banks with modest volumes produced regular-premium business that customers kept. Some provincial branches of the largest banks produced enormous single-premium volumes at margins that did not cover the capital they required. In the premium table, the second group was our success. In a value table, it was a cost. None of this was hidden. Each number had been available for years in separate reports owned by separate departments; nobody had been asked to put them on one page for each bank.

We decided in March 2024 to keep thirteen partners and end the rest at their renewal dates. In 2025 bank-channel first-year premium fell to RMB 7.0 billion. Regular premium rose from 19 to 58 per cent of that business, thirteen-month persistency from 88 to 94 per cent and the channel's new business value from RMB 210 million to RMB 560 million. We dropped further in the table. Our head of bancassurance warned that the largest banks would lose interest in us, and one provincial branch did move us down its shelf.

There were costs I underestimated. In nine counties of rural Hubei and Hunan, the rural banks we left were our only means of reaching customers. Those families needed medical cover more than savings, and we have not yet found another way to reach them. If I were starting again I would keep such banks on a protection-only agreement.

The scoreboard we use instead

Giving up premium rank as a goal does not mean ignoring scale. A life insurer needs enough business to cover its fixed costs and spread its risks. But scale should be measured in value and in customers who stay, not in money that arrives this quarter and must be repaid with interest for decades.

At Jiangheng the executive committee now reviews five figures each quarter: new business value and its margin by channel; persistency at thirteen and twenty-five months; the solvency capital consumed by new business; the share of new business value from protection and care; and value per bank partner. The board's strategy and investment committee sees the same five. Premium income still appears in our reports, as it must, but no executive's bonus depends on our place in the table.

This approach has a cost in perception. Some business partners ask what has gone wrong when our premium falls. Agency recruiters find it harder to attract candidates who judge a company by its size. Our shareholders have accepted the argument, partly because the value figures have improved and partly because they remember the years when mid-size insurers that grew fastest through banks later had to ask for new capital.

I do not expect the table to disappear. It is public and easy to read. But a mid-size insurer's board decides what it rewards. If it rewards rank, management will deliver rank, and the bank channel will be the easiest route. If it rewards value per partner, persistency and capital efficiency, the insurer will be smaller and stronger. With long-term government bond yields below 2 per cent, that is the better trade.