The first half of 2026 witnessed a staggering surge in dividend insurance premiums, exceeding one trillion yuan and marking a 94.4% year-on-year increase. This single-handedly surpassed the total annual figures for both 2024 and 2025. Behind this impressive number lies a collective industry-wide effort to adapt to the low-interest-rate era, using a "guaranteed minimum plus floating returns" mechanism to distribute the pressure of rigid liability costs.

History, however, repeatedly shows that dividend insurance is not a universal cure-all. Since its inception in 2000, it has experienced both the fervor of being a market-dominant product and the bitterness of a surrender wave. Now, with trillions of yuan pouring in, we must ask: is this a genuine solution, or is it a dangerous gamble that provides short-term relief at the cost of long-term stability?

A recent report from a relevant authority revealed stunning data: in the first half of the year, dividend insurance premiums reached 1,012.6 billion yuan, a 94.4% increase compared to the same period last year. This product now accounts for over 35% of total life insurance premiums. This six-month figure has already surpassed the full-year totals for 2024 (765.9 billion yuan) and 2025 (904.2 billion yuan). In stark contrast, the overall premium income growth for life insurance companies during the same period was a mere 3.6%, with accident insurance even experiencing a negative growth rate of -11.11%. The trillion-yuan dividend insurance boom is a reflection of the collective anxiety gripping the entire life insurance industry in a low-interest-rate environment.

This is not the first time dividend insurance has been at the forefront. Looking back over its 26-year history, it has undergone at least three major cycles of boom and bust. Each cycle's rise and fall is a reflection of the deep-seated interplay between interest rate cycles, regulatory policies, and the industry's competitive landscape. As the industry once again goes "all in" on dividend insurance, we must calmly question whether history is destined to repeat itself.

The Truth Behind the Trillion-Yuan Dividend Insurance Surge

On July 31st, the China Insurance Association reported that premium income from dividend insurance in the first half of 2026 hit 1,012.6 billion yuan, a 94.4% increase year-on-year. This growth rate far outpaced the 3.6% growth of the overall life insurance market. The structural shift is even more striking when looking at new product sales: data from the first half of 2026 shows that among the top five major products of 50 life insurance companies, dividend insurance accounted for 160.427 billion yuan in total premiums, representing 45.47% of the premiums from these top products and 20.73% of total signed premiums.

Diverging Strategies: The Business Logic Behind the Numbers

Within the trillion-yuan dividend insurance boom, the attitudes of various insurance companies are not uniform. From the strategic shift in 2025 to its implementation in the first half of 2026, the divergence is intensifying. Leading insurers have already completed their collective pivot. In 2025, the proportion of dividend insurance in China Life Insurance's individual first-year premium income jumped to nearly 60%. Ping An Insurance (Group) Company of China, Ltd. saw its dividend insurance premium scale reach 91.887 billion yuan, a massive 41.28% year-on-year increase. New China Life Insurance Co., Ltd. reported that dividend insurance accounted for 77.0% of its premiums in the fourth quarter. China Pacific Insurance (Group) Co., Ltd. saw dividend insurance comprise 50% of its new regular premiums, rising to 61.4% through its agent channel.

Entering the first half of 2026, the disparity in commitment becomes even clearer based on the top five product dividend insurance premiums of each company. Among non-listed insurers, Taikang Life Insurance Co., Ltd. led with 33.643 billion yuan, followed by China Post Life Insurance Co., Ltd. and Generali China Life Insurance Co., Ltd. In contrast, seven companies, including CCB Life Insurance Co., Ltd., Fosun United Health Insurance Co., Ltd., and Trustmutual Life Insurance Company, had no dividend insurance products among their top five, sticking to traditional fixed-income routes. Specifically, Taikang Life Insurance Co., Ltd.'s top four products by premium in the first half of the year were all dividend-linked, with total premiums of 33.643 billion yuan, far exceeding others. China Post Life Insurance Co., Ltd. had two dividend-type products among its top performers, with 10.292 billion yuan and 9.275 billion yuan in premiums, respectively. All five of Generali China Life Insurance Co., Ltd.'s top products were dividend insurance, with its leading product generating 7.533 billion yuan in premiums in a mere six months.

However, while the trillion-yuan premium influx is impressive, judging a company's strategy as "aggressive" or "conservative" solely based on the absolute value of its dividend insurance business can be misleading. Absolute figures naturally favor larger companies; a company with a trillion yuan in assets might generate a much larger absolute dividend insurance volume from a 20% share than a company with ten billion yuan in assets from an 80% share. Only by removing the effect of company size does the "dividend insurance proportion" truly reflect a company's strategic commitment to this product line. Based on the latest data from the first half of 2026, the 50 life insurance companies show a clear "three-tier" divergence in their dividend insurance allocation.

But the proportion isn't the whole story. It must be considered alongside other deep operational factors, such as solvency, shareholder background, and historical legacy, to understand the true logic behind the numbers. The first tier comprises "strategic drivers" with a dividend insurance proportion exceeding 80%. This group includes not only companies aggressively transforming but also those "naturally" inclined towards dividend insurance due to their foreign-invested nature or specific license attributes. Their high proportion is not simply a sign of "gambling"; rather, most of these companies have a longer-term perspective on their liability side. For instance, National Pension Insurance Company, as a specialized pension insurer, sees dividend insurance's floating return mechanism as a natural fit for hedging long-term interest rate fluctuations, a choice driven by its business model rather than market speculation. Companies like Heng An Standard Life Insurance Company Limited, HSBC Life Insurance Company Limited, and American International Assurance Company Limited, all joint ventures or foreign-invested, have 100% of their main products as dividend insurance. This stems from their shareholders' long-term experience navigating low-interest-rate environments globally. They prioritize managing spread risk through the dividend mechanism over chasing short-term scale, a "defensive offense." For a smaller joint venture like Fosun Prudential Life Insurance Co., Ltd., competing with large companies on channel fees for fixed-income products is difficult. However, transition to dividend insurance, with its more complex structure and lower homogeneity, creates a buffer for smaller companies. It's worth noting that even within this first tier, strategies differ; Heng An Standard Life Insurance Company Limited and HSBC Life Insurance Company Limited have lower top-five product concentration than National Pension Insurance Company, suggesting they maintain some product diversification to mitigate the risk of a single strategy failing.

The second tier, "resource-constrained and transitioning," with a proportion of 40%-80%, holds the most deceptive data. Some companies have a high proportion because they aim for growth but are capital-constrained, while others have a low proportion due to a heavy historical burden that makes a quick switch risky. Taikang Life Insurance Co., Ltd.'s high proportion is supported by its unique "insurance + healthcare & senior living" community model, as its long-term real estate investment capabilities provide the necessary backing for the high expected returns of dividend insurance. China Post Life Insurance Co., Ltd., despite its large absolute size, has a dividend insurance proportion of only 23%. As a bank-affiliated insurer heavily reliant on the savings bank network, its customers have low acceptance of "non-guaranteed" products. Furthermore, its historical portfolio is heavily weighted towards fixed-income assets, making a transition to dividend insurance a massive challenge in terms of investor education and asset-liability management adjustment. Companies like CCB Life Insurance Co., Ltd., ABC Life Insurance Co., Ltd., and ICBC-AXA Assurance Co., Ltd. have strong shareholders, but dividend insurance demands high active management capabilities on the investment side. Rushing to scale up without a capable investment team could endanger dividend fulfillment rates. Their current low proportion could be a prudent risk-control measure, or a result of organizational inertia and underdeveloped capabilities. Therefore, classifying bank-affiliated companies like China Post Life Insurance Co., Ltd. and CCB Life Insurance Co., Ltd. as "conservative" based solely on their low dividend insurance proportion is inaccurate. They may be constrained by changes in their solvency margin or internal risk model adjustments. A "reduction" or "low proportion" in this context could be a rational strategy to preserve their operating license.

The third tier, "peripheral observers," with a proportion below 10%, mainly consists of small companies or those in restructuring, where the data reflects survival struggles rather than strategic choices. Small companies like Trustmutual Life Insurance Company and Huagui Life Insurance Co., Ltd. prioritize cash flow and channel maintenance. Dividend insurance, with its higher sales difficulty and after-sales costs, is less attractive than simpler fixed-income products for sustaining day-to-day operations and agent retention. Pheim Life Insurance Company, as a special entity that took over Anbang's assets, still focuses on risk disposal and asset revitalization. Issuing long-term dividend insurance on a large scale before its historical assets are fully digested and investment capabilities are normalized could accumulate spread risk. Their "inaction" at this stage is a cautious passivity imposed by their unique historical circumstances.

Looking beyond the data, the dividend insurance landscape in the first half of 2026 is not a simple "who has more, who has less." It is a comprehensive test based on "capital strength + investment capability + channel attributes." True winners, like Taikang Life Insurance Co., Ltd. and foreign-owned companies, have the confidence or capacity to pursue a high proportion of dividend insurance, supported by a moat in their asset side or ecosystem. Pseudo-aggressive companies, particularly smaller ones that blindly copy the strategies of market leaders without the underlying investment capabilities, are at high risk of triggering crises 3-5 years down the line due to poor dividend fulfillment rates. The rational conservatism of bank-affiliated insurers is partly a temporary low proportion aimed at waiting for their investment research capabilities and channel understanding to catch up, and partly due to pressures like solvency. Therefore, evaluating a company's stance on dividend insurance should not be based solely on premium growth rates, but also on the robustness of its solvency safety cushion and the stability of its average investment return over the past 5 years. Only when these two indicators are met can the "dividend insurance boom" be considered sustainable.

The confluence of supply and demand is the inevitable driver. On the demand side, the 10-year government bond yield is approaching 1.7%, and long-term deposit rates at banks have generally fallen below 2%, leaving trillions of yuan in maturing deposits facing an "asset famine." Dividend insurance, with its unique structure of "guaranteed minimum return + floating dividend," caters to both safety and growth. A research report from Huatai Securities points out that the rigid cost of dividend insurance is lower than that of traditional policies, which is more beneficial for alleviating spread risk in a low-interest-rate environment. Based on the current 1.75% guaranteed rate for dividend insurance, if an insurance company achieves a 5% investment return, the customer's total return could exceed 4%, higher than the average annualized return of 2.05% for bank wealth management products. On the supply side, since 2023, the financial regulatory authority has lowered the cap on guaranteed interest rates for three consecutive years, from 3.5% in August 2023 to 3.0% in September 2024, and then to 2.0% in September 2025. The competitiveness of traditional products has been gradually squeezed. With the guaranteed rate ceiling for dividend insurance falling to 1.75%, its lower rigid liability cost has become a key tool for insurers to combat spread losses. Additionally, the reduction of the dividend insurance demo rate ceiling from 3.9% to 3.5% effective July 1, 2026, triggered a wave of concentrated sales before the June 30th deadline. This part of the demand is likely "borrowed from the future," and the actual growth rate after returning to normalcy in the second half will be the true test of market acceptance.

Why Is More Not Necessarily Better?

However, shifting focus from the growth rate table to actuarial models, capital reports, and dividend announcements reveals a different narrative: the surge in dividend insurance is potentially undermining the industry's health in another way. From an actuarial perspective, the new business value margin of dividend insurance is generally lower than that of traditional insurance under the same assumptions. Some insurers stated in media interviews that a higher proportion of dividend insurance is not necessarily better. For example, listed insurers have set more conservative risk discount rates for floating-return products like dividend insurance: China Life Insurance uses a 7.2% discount rate for dividend insurance versus 8.0% for traditional products, while Ping An Insurance (Group) Company of China, Ltd. uses 7.5% for dividend insurance versus 8.5% for traditional ones. Under the same investment return assumptions, because dividend insurance must distribute at least 70% of its distributable surplus to policyholders, its contribution to shareholders' spread is typically lower than that of traditional insurance in the current interest rate environment.

This creates a structural conflict in shareholder returns. For shareholders seeking a return on net assets, dividend insurance is far less "cost-effective" than traditional insurance. Executives at some successful private small and medium-sized companies have openly stated, "This year's investment performance is very good, so we have decided to strictly control dividend insurance, doing less or even none, and focusing on fixed-income products." When an insurer's investment performance is stellar, the majority of the returns flow to customers, not shareholders, a contradiction that is particularly acute when the equity market performs well. Furthermore, under the second phase of the solvency regulatory framework, dividend insurance has a higher capital consumption than traditional insurance. By the end of the fourth quarter of 2025, the average comprehensive solvency margin of insurance companies was 181.1%, down 18.3 percentage points from the end of 2024. For smaller insurers with weak capital, blindly expanding the proportion of dividend insurance could create new solvency pressures. Zhou Jin, a partner in the financial services practice at Baker Tilly China, notes that the relative capital consumption of dividend insurance makes it difficult for capital-constrained small and medium-sized insurers to develop this product line.

The dual effect of the new accounting standards, which took effect on January 1, 2026, adds another layer of complexity. Dividend insurance is generally measured using the Variable Fee Approach (VFA), which differs from the General Measurement Model (GMM) mainly in the subsequent measurement of the Contractual Service Margin (CSM). The VFA can dampen the impact of short-term stock market volatility on financial statements. However, the flip side is that as the proportion of dividend insurance increases, the volatility of the CSM balance itself can also increase. This is because the VFA absorbs the fluctuations of the underlying items into the CSM, magnifying the CSM's own volatility. Other potential side effects and risks include product concentration risk, as seen in the first half of 2026 when 25 companies saw their top five products account for over 50% of total signed premiums, with many having a high proportion of dividend insurance. This concentration narrows the product matrix. The transition to dividend insurance is also reshaping insurance asset allocation, with a shift from ultra-long-term bonds to mid-term credit bonds, which can create reinvestment risk. If government bond yields continue to fall, these short-to-medium-term bonds will mature into a lower-yielding environment, eroding returns. This risk is especially acute for dividend insurance accounts, as shrinking fixed-income returns directly drag down the overall return of the dividend account, thereby hurting the dividend fulfillment rate.

The Matthew Effect in dividend fulfillment rates is already evident. According to media statistics, among 714 dividend insurance products disclosing their 2025 dividend fulfillment rates, the highest was 166%, the lowest was 0%, and over 30% had a rate above 100%. This means that for about 70% of products, the actual dividend for the year was below the demo level. Leading insurers, with their investment research advantages, may further expand their market share, while smaller insurers with weak investment performance could find their high-cost liabilities becoming a heavy burden. Ren Zili, Vice President of the Insurance Law Research Association under the China Law Society, notes that large insurers can continuously attract high-end savings customers with their brand, channels, and dividend performance, while smaller insurers, with limited brand influence and a lack of long-term dividend performance history, face natural customer skepticism about the sustainability of future dividend payments over decades. The complexity of dividend insurance products also demands higher professional standards from agents, raising the risk of mis-selling. Industry insiders report that complaints related to dividend insurance at consumer protection meetings have already risen significantly, becoming a primary category of complaint. If the market turns down, a large number of policies may yield dividends below consumer expectations, potentially triggering a surrender wave similar to that of 2011. Finally, while dividend insurance has driven market growth, accident insurance saw a -11.11% negative growth rate in the first half of 2026, and health insurance growth was only -0.67%. This dominance of dividend insurance reflects a crowding-out effect on protection-type products, creating tension with the regulatory push for insurance to return to its core purpose of protection.

A Century of History: The Dividend Insurance Story

The history of dividend insurance is far longer than most people realize. The first concept originated in 1762 when William Morgan, an actuary at the Equitable Life Assurance Society in England, discovered that the company's actual mortality rate was lower than expected and decided to return the surplus to customers. In China, the birth of dividend insurance was also driven by an interest rate crisis. Starting in 1996, the one-year bank deposit rate plummeted from 11% to 2.25% in 1999, causing a severe spread loss crisis for the industry due to previously sold policies with high guaranteed rates (some as high as 9%). In June 1999, regulators cut the cap on life insurance guaranteed rates to 2.5%, which sharply reduced the competitiveness of traditional products. In April 2000, China Life Insurance Company launched the first dividend insurance product in Shenzhen, the "Millennium Financial Endowment Insurance (Dividend Type)," ushering in the era of dividend insurance in China.

Over the past 26 years, dividend insurance has experienced four complete cycles, each closely tied to changes in interest rates and regulatory policies. The first cycle, from 2000 to 2010, was a period of birth and explosion. Dividend insurance quickly became popular in the low-interest-rate environment. The 2006-2007 A-share bull market led to high investment returns, with China Life Insurance Company's dividend account achieving nearly a 10% return in 2007, far exceeding customer expectations. After the 2008 financial crisis, dividend insurance's smoothing mechanism helped it maintain stable returns, gaining market favor compared to the crash in unit-linked products. A key policy catalyst came in 2009 when the Ministry of Finance issued new accounting rules that excluded investment account income from unit-linked and universal life insurance from premium statistics, making dividend insurance the only new-type product eligible for full premium recognition. Driven by the need to rank by premium scale, insurers shifted resources to dividend insurance. By 2010, there were over 400 dividend insurance products on the market, accounting for 75% of total industry premiums, creating a market-dominant product.

The second cycle, from 2011 to 2017, was a period of ebb and adjustment. The market share of dividend insurance peaked in 2011 and then began to decline. Over-reliance on a single product led to product homogeneity and weakened protection functions. The asset side also came under pressure, with the 10-year government bond yield falling from 4.1% in 2011 to 3.6% in 2017, making it harder to maintain high dividend payouts. In August 2013, the former regulator launched a market-oriented reform of life insurance pricing, raising the cap on guaranteed rates for ordinary life insurance from 2.5% to 3.5%, and up to 4.025% for annuities. These high-guaranteed-rate annuity and protection products quickly rose in popularity, and the share of dividend insurance in total premiums gradually fell from around 90% in 2011 to 32% by 2021. The third cycle, from 2018 to 2023, saw a brief recovery followed by a relapse. When regulations curtailed short-term products like "quick-return annuities + universal insurance" in 2017, dividend insurance once again became a focus. The 2018 stock market turmoil also highlighted dividend insurance's stability. However, in 2019, regulators lowered the cap on the reserve valuation rate for long-term annuities from 4.025% to 3.5%, and then the appeal of traditional fixed-rate products like 3.5% and 3.0% guaranteed whole life insurance squeezed dividend insurance out. From 2020 to 2023, dividend insurance premiums fell for four consecutive years. The fourth cycle, a new restart, began in 2024. In August 2024, the financial regulatory authority issued a notice explicitly encouraging the development of long-term dividend-type insurance products and establishing a dynamic adjustment mechanism linking guaranteed rates to market interest rates. Since then, the industry has been adjusting guaranteed rates quarterly. Dividend insurance has moved from the periphery to the mainstream, with most insurers seeing it account for over 50% of new business in the first half of 2025, and China Taiping Insurance Group Ltd. exceeding 90%.

A Good Medicine, But Not a Panacea

Looking at the overall trajectory of dividend insurance and the data analysis, we can offer the following recommendations for decision-makers. For regulators, a "safety valve" mechanism for the proportion of dividend insurance should be established, setting an early warning ceiling for its share of total life insurance premiums to prevent the industry from becoming overly concentrated in a single product type, similar to the risk seen in 2010. "Transparent regulation" of dividend fulfillment rates should be strengthened, requiring companies to disclose rolling average fulfillment rates over 5-10 years, rather than just single-year data, to help consumers make more rational decisions. The survival space of small and medium-sized insurers should be a concern, as the transition to dividend insurance is intensifying the Matthew Effect. Differentiated capital constraints and transition paths for these companies should be considered to avoid putting them at a further disadvantage.

For shareholders and executives of insurance companies, the advice is to avoid "blindly following the trend" and adapt strategies to the company's own circumstances. Dividend insurance is not a cure-all. Small and medium-sized insurers should dynamically adjust their sales mix of dividend insurance and fixed-income products based on their own solvency, shareholder return demands, investment capabilities, and channel strengths, rather than simply copying the strategies of market leaders. Investment capability is the decisive factor. The core competitiveness of dividend insurance ultimately depends on an insurer's ability to manage equity assets and generate excess returns. Investment in building a robust research and analysis system should be increased, seeking a balance between the base returns from fixed-income assets and the elastic returns from equity and alternative assets. Finally, caution is needed against "short-term spurts" masking "long-term concerns." The 94.4% growth rate in the first half cannot be taken at face value, as it likely includes a significant pull-forward of sales before the demo rate reduction on June 30th. The actual premium growth rate after the market normalizes in the second half will be the true indicator of market acceptance.

For consumers, dividend insurance's "guaranteed minimum + floating return" structure suits risk-averse investors with medium-to-long-term financial planning needs, not those seeking high volatility and high returns. When choosing a product, consumers should focus on the insurer's long-term investment capability, historical dividend fulfillment rates (looking at 5-10 year averages, at minimum), and solvency margin, rather than just the advertised demo rate.

Conclusion

The return of dividend insurance is a structural self-rescue by the insurance industry in a low-interest-rate era. Its "guaranteed minimum + floating returns" mechanism creates a balanced relationship of "shared benefits and shared risks" between the insurer and the customer, effectively reducing the pressure of rigid liability costs and buying the industry some breathing room. However, history repeatedly shows that dividend insurance is not a panacea. Its sustainability is highly dependent on three conditions: first, the insurer possesses the long-term investment capabilities to navigate through cycles; second, regulators can effectively control sales misconduct and manage customer expectations; and third, the industry can avoid excessive concentration in a single product type. As trillions of yuan flow into dividend insurance, we must remain clear-headed. This is not the end point, but the starting point of a new round of tests. What ultimately determines the fate of the insurance industry is not the rise and fall of a single product, but whether the entire industry can transition from a "scale-driven" model to a "value-driven" one, and from "competing on channels" to "competing on capabilities." As one seasoned industry executive put it, "Dividend insurance has indeed shouldered the historical mission of breaking the deadlock in the low-interest-rate era in recent years. But when it comes to practical business operations, it is not a magical cure-all. It is a 'common tool' that requires careful balancing of the company's own strengths, shareholder returns, customer needs, and investment capabilities." This is perhaps the clearest perspective for understanding the current dividend insurance frenzy.