Dongwu Securities: The hierarchical solidification pattern of life insurance continues for a long time, and the top-level advantage of the industry is strong

The Zhitong Finance App learned that Dongwu Securities released a research report saying that the stratified solidification pattern of life insurance will continue for a long time: ① The oligarchy barriers of leading companies will continue to be strengthened, and industry concentration will remain high for a long time. ② The industry accelerates survival of the fittest. Small and medium-sized insurers continue to clear out at the end, the differentiation of small and medium-sized institutions intensifies, and only specialty gaming furniture provides living space. ③ The market share of foreign-funded and joint venture life insurance has increased steadily, focusing on misplaced competition on segmented tracks, but it is difficult to shake the basic market of the leading local market. ④ Product and service competition replaced large-scale competition, and pension and health ecology became the core winners and losers in the medium to long term, and the integration of production and service opened up the enterprise gap.

The main views of Dongwu Securities are as follows:

After many rounds of supervision and product reforms, the leading share of China's life insurance industry is now stable

1) 1980-1996: A competitive market specialized in life insurance gradually formed. After the domestic insurance business resumed in 1980, China People's Insurance Company was the only national insurance operator in the country. In 1985, the “Interim Regulations on the Administration of Insurance Companies” were introduced. The market entry threshold for insurance institutions was liberalized for the first time, and the market pattern reached an inflection point. In 1995, along with the establishment of the division of business principles for life insurance, a competitive market for life insurance was initially formed. At that time, People Insurance, Ping An, and Taibao almost covered the entire market share.

2) 1997-2016: An era of expansion of diversified entities and incremental competition based on scale. On the one hand, China's life insurance market participants continued to expand: ① After joining the WTO, the process of opening up the domestic insurance market to the outside world accelerated, and the personal insurance industry ushered in a wave of centralized establishment of joint ventures. ② In 2004, the former Insurance Regulatory Commission set the tone for increasing market players, easing the threshold for insurers, and centralizing funding for a large number of private life insurances. ③ In 2009-2013, banking life insurance was launched in batches, and new channel-type competitors were added to the life insurance industry. On the other hand, pricing and product rules in China's life insurance industry continued to iterate, and the rise of universal insurance in the early 2010s further boosted the breakthroughs of small and medium-sized insurers. In this context, the life insurance industry is gradually moving from a high level of monopoly to full diversification of competition.

3) Since 2017: “Asset-driven liabilities” have completely exited, and the competitive landscape is solidifying. On the one hand, regulation has driven the complete exit of “asset-driven liabilities”, forcing the entire industry to return to “insurance,” and the industry's development focus has shifted to long-term savings products such as long-term serious illness, whole life insurance, and pension benefits. Small and medium-sized insurance companies' shortcuts to overtaking cars have been blocked. On the other hand, the second generation of repayment has established a refined capital restraint framework centered on risk, significantly raising the capital threshold for entry and continuous operation in the domestic life insurance industry, and further solidifying the competitive pattern of the life insurance industry. After 2017, the competitive pattern of the domestic life insurance industry showed the evolutionary characteristics of the gradual solidification of the echelon pattern. CR5 and CR10 premium income of personal insurance companies remained relatively stable after 2017, at 45% and 60% respectively by 2025, with a strong top-level advantage in the industry.

Looking at the overseas life insurance market, the trend of leading concentration is the same

1) America: Multiple rounds of reforms and cycles have been cleared, and the industry pattern tends to be concentrated. Before the 1980s, the US life insurance industry showed a competitive pattern of fragmentation and geographical division. The 1986 Tax Reform Act greatly stimulated the vitality of the annuity circuit at the product side and further promoted market stratification. Since then, the risk of interest spreads and losses in the US life insurance industry continued to be exposed in the late 80s. The industry ushered in clean-up, and forced supervision to implement a unified venture capital regulatory framework in the early 90s, thus further strengthening the advantages of leading institutions. After the 2008 financial crisis, the pattern of the US life insurance industry was once again deeply restructured. The life insurance industry formed a steady pattern of clear stratification, circuit isolation, and hardened barriers: mutual aid leaders monopolized the traditional protection circuit, listed comprehensive life insurance groups focused on the corporate welfare and pension circuit, and regional small and medium-sized companies gradually clarified or transformed into segments. In 2025, CR5/CR10/CR20 premiums in the US life insurance industry were 31%/47%/67%, respectively, and leading companies had outstanding competitive advantages.

2) Japan: Oligopoly barriers have continued throughout, and cyclical reshuffling has not disrupted the competitive advantage of the head. After the war, the Japanese life insurance industry implemented a “escort fleet” window guidance and supervision system, and the steady state pattern of industry oligarchy solidified for a long time. The huge interest spreads brought about by Japan's bubble economy at the end of the 20th century led to a deterioration in insurance companies' operations, triggering a “wave of bankruptcy.” After the subsequent pain of the collapse of the bubble economy and the iterative adjustment of regulatory rules, the Japanese life insurance industry has basically been cleared up and has once again entered a stable state of extremely stable oligarchy competition. In 2024, the “nine major backbone companies” relied on deep channel accumulation and insurance policy advantages. New premium income, valid insurance policy premium income, premium income, and total assets accounted for 29%, 44%, 35%, and 56% of the industry respectively, firmly controlling the voice of the industry.

Risk warning: long-term interest rates are trending downward; the stock market continues to be sluggish; the growth of new orders falls short of expectations