Core Viewpoint - The China Banking and Insurance Regulatory Commission (CBIRC) has issued a notification to strengthen the regulation of non-auto insurance business, effective from November 1, 2025, which aims to enhance compliance, quality, and consumer protection in the insurance industry [1] Summary by Sections Notification Key Points - The notification requires insurance companies to lower the assessment requirements for premium scale, focusing on high-quality development and increasing the weight of compliance, quality efficiency, and consumer rights protection [2] - It mandates strict adherence to the "reporting and operation in one" principle for non-auto insurance, with specific requirements on rate management, clause usage, intermediary management, and operational expense regulation [2] - The notification introduces a "fee-based issuance" approach, requiring insurance companies to issue policies and invoices only after collecting premiums [2] - It promotes the standardization of non-auto insurance [2] Policy Impact Analysis - The implementation of the "reporting and operation in one" principle is expected to address issues such as high handling fees, low premium rates, and generalized liabilities in the non-auto insurance sector, thereby improving long-term underwriting profitability [2] - The "fee-based issuance" will enhance cash flow and financial stability for insurance companies, alleviating pressure from receivables and reducing disputes arising from mismatched payment obligations and insurance liabilities [2] - Leading companies are expected to leverage their brand, scale, network, expertise, and talent to enhance pricing and underwriting capabilities, improve claims service levels, and strengthen market competitiveness [2] Company Actions - The company is proactively implementing the "reporting and operation in one" principle for non-auto insurance, having initiated key work ahead of schedule, including a meeting with ten insurance companies to promote industry self-regulation [2] - The company is involved in the development of demonstration products in the insurance sector and has commenced the transformation of non-auto insurance products and expense management [2] - In the first half of 2025, the company's non-auto insurance combined ratio (COR) decreased by 0.1 percentage points year-on-year to 95.7%, with most non-auto insurance types achieving underwriting profitability [2] Financial Impact Analysis - The notification is expected to stabilize the company's guidance on commercial non-auto insurance underwriting profitability for the year [3] - The company has adjusted its target for the auto insurance COR from around 97% to below 96%, and for commercial non-auto insurance from breakeven to below 99% [3] - Assuming a 1 percentage point reduction in the combined ratio for non-auto insurance (excluding agricultural and export credit insurance), the company could see an increase in underwriting profit of approximately 1.351 billion yuan, accounting for about 3.6% of pre-tax profit in 2024 [3] Investment Recommendation - The implementation of the "reporting and operation in one" principle is expected to open a second curve of underwriting profitability [3] - The company maintains its profit forecast, expecting net profits of 33.09 billion, 35.39 billion, and 36.94 billion yuan for 2025-2027, with year-on-year growth rates of 2.8%, 6.9%, and 4.4% respectively [3] - The company is characterized by high dividend yields and an upward economic cycle, with potential for further valuation release, maintaining a "buy" rating [3]
中国财险(02328.HK)：非车“报行合一”落地 打开承保盈利第二曲线