Life insurers across Asia saw strong revenue growth in 2024, particularly in China, but that growth was tempered by significant regulatory changes that impacted both the performance and strategic direction of many global insurers active in the region’s largest insurance market.
New capital requirements under the second phase of the China Risk-Oriented Solvency System (C-ROSS Phase II) and an updated risk-based solvency framework are reshaping how players structure and sell life products – especially those with long-term guarantees.
AIA, Allianz, FWD Group and China Life are among the global insurers which reported robust Value of New Business (VONB) growth in Asia last year, but in achieving this growth, they have had to substantially adjust their portfolio and customer acquisition strategies in China.
These shifts are clearly visible in their 2024 earnings disclosures, where many explicitly linked the impact of China’s new solvency rules and capital sensitivity on their product design, distribution and overall profitability.
Strong consumer demand for protection and retirement products drove growth in China and regionally last year, but it also served as something of a watershed year, as insurers had to align growth ambitions with evolving capital adequacy frameworks.
For foreign players, in particular, the challenge is twofold: adapting to local rules while protecting profitability across a region where China accounts for a growing share of life insurance revenue.
Regulatory changes redefine financial strategies… and ratios
The implementation through 2022 and 2023 of the second phase of C-ROSS Phase II significantly altered how Chinese regulators evaluate the financial health of insurers. Under the new framework, insurers are required to hold more capital against products with long-duration liabilities and guaranteed returns—hallmarks of traditional life insurance.
For some insurers, this translated into measurable financial impact. China Life, the country’s largest life insurer, saw its comprehensive solvency ratio decline to 205.23% by mid-2024, from 218.54% at the end of 2023, citing changes in the solvency reserve assessment curve, redemption of capital supplementary bonds and investment asset adjustments. While the company remains well-capitalised, it also acknowledged the need to optimise investment allocation and strengthen asset-liability matching to stay compliant under the new regime.
Foreign insurers were equally affected. Allianz noted in its annual report that the updated rules require “continued adaptation in product structuring and pricing”. Similarly, AIA, which generates 74% of its total VONB from Asia, highlighted in its 2024 results that it had shifted to a “more capital-efficient product mix” in response to market demands and regulatory alignment pressures.
The changes pushed insurers to rethink their financial strategies. Products that once contributed significantly to revenue and VONB—particularly long-term endowment or universal life policies—are now being scaled back in favour of unit-linked and shorter-duration offerings, which require less capital and offer greater flexibility under C-ROSS.
FWD Group, which achieved its first net profit under IFRS 17 in 2024, reported a 31% increase in contractual service margin (CSM) from new business, driven in large part by performance in Hong Kong and Macau. While not explicitly attributing this to regulatory changes, the company emphasized its emphasis on meeting the “unique protection, health, and wealth requirements of customers in Asia,” suggesting a similar pivot to flexible, investment-oriented life products.
Capital-efficient products and distribution rebalancing
One of the most immediate consequences of China’s regulatory changes was a shift in product strategy. Insurers across the board are scaling back capital-intensive, guaranteed-return policies that burden their solvency ratios. Instead, they are offering more capital-light products, such as term life, annuities with adjustable features, and unit-linked life insurance.
Allianz and AIA both highlighted these trends in their 2024 disclosures. These insurers and others aim to maintain regulatory compliance, preserve their capital and protect earnings by retooling their product portfolio with offers which transfer investment risk to policyholders. These products also do double-duty as growth vehicles: insurance-based wealth-building products are increasingly in demand by China’s rising middle class.
Distribution strategies are evolving in tandem. AIA expanded its bancassurance partnerships with Chinese banks, aiming to reduce acquisition costs and build market share with compliant products. In its 2024 presentation, AIA highlighted bancassurance’s growing contribution to VONB, noting that these channels are ideal for capital-efficient product distribution and customer segmentation.
Digital transformation is another lever insurers are pulling to increase efficiency (and by extension preserve capital) in China’s tighter regulatory environment. FWD Group launched FWD Cube, an AI-driven agency management platform, in China and other Asian markets: these tools optimise agent performance, reduce underwriting time, and deliver policy solutions aligned with regulatory requirements.
Insurers are also paying closer attention to solvency-driven product pricing. This includes repricing long-term products to reflect capital costs, tightening policy features, and embedding flexibility that allows insurers to adapt to future changes in solvency reserves.
New baseline for future Asian operations
Regulatory changes in China are expected to shape how insurers across Asia manage growth, product development and risk exposure. With C-ROSS Phase II potentially serving as a template for other emerging regulatory regimes, insurers are now building systems and strategies designed for long-term solvency optimisation, not just short-term growth.
This may constrain innovation in the short term. Complex, capital-heavy products could become less attractive, especially as reserve requirements increase. However, it may also unlock more resilient growth paths for insurers that are able to scale up flexible offerings while investing in AI, analytics and compliant infrastructure.
China Life, despite its dominant position, reflects this shift. The company expanded its pension insurance coverage to 96.32 million customers in 2024, up from 92 million in 2023—a signal that demand for retirement-related insurance remains high, even as the company restructures its asset mix and risk exposure.
As regulatory environments across Asia evolve, life insurers will need to maintain agility in capital management, product design, and distribution. The playbook being written in China—centred on solvency alignment, operational efficiency, and risk-adjusted product growth—is likely to serve as a template for other high-growth markets.
The lessons from 2024 are clear: strong performance in Asia’s life insurance market depends on regulatory foresight and adaptive business models as much as organic customer demand.
