On February 27, the National Financial Regulatory Administration issued a statement: it provided the latest data on the insurance intermediary market cleanup and quality improvement actions that will be implemented starting in 2024.
From 2024 to 2025, a total of 3 insurance intermediary groups and 57 insurance professional intermediary legal entities were revoked and canceled nationwide; 3,730 branches of insurance professional intermediaries and 226 insurance agency institutions were deregistered.
Behind these numbers, there are new changes in the direction of China's insurance industry.
<h2>Why does the insurance intermediary cleanup matter to every policyholder?</h2>
When you purchase a life insurance policy at a bank or consult about critical illness insurance through a platform, there is often a licensed insurance intermediary agency providing services behind the scenes.
According to Zhitang, these agencies are mainly divided into two categories: one is professional intermediaries that specialize in selling insurance (such as insurance brokers or agency companies), and the other is part-time agents (such as 4S shops) whose main business is not insurance but also engage in sales.
These two types of agencies represent insurance companies in selling products and also bear customer service responsibilities.
It is reported that in recent years, some intermediary agencies have deviated from the right path: some have never actually operated after registration, becoming &#34;shell companies&#34;; some have fabricated manpower and fictitious policies to obtain commissions; some do not even have basic information systems, leading to disorganized customer data and inability to respond promptly in case of claims.
These behaviors not only disrupt the market but may also cast doubt on the validity of policies and hinder claims.
<h2>The &#34;minefields&#34; of insurance intermediaries</h2>
What behaviors are being met with &#34;zero tolerance&#34; from regulators behind the wave of insurance intermediary deregistration?
On the official website of Beijing Jincheng Tongda Law Firm, there is a research article titled &#34;Analysis of Compliance Red Lines and Governance Points for Insurance Intermediary Agencies,&#34; which outlines the high-frequency violations of insurance intermediaries in recent years.
Specifically:
<blockquote>
First, operating without a license or cooperating with unqualified parties;
Second, fabricating false reports and financial data;
Third, impersonating others during the sales process or allowing unlicensed personnel to operate;
Fourth, conducting cross-provincial operations without permission, such as an intermediary registered in Province A selling non-exempt insurance products to clients in Province B;
Fifth, exceeding the commission cap through off-the-books kickbacks and fictitious expenses, violating the &#34;reporting and operating as one&#34; principle;
Sixth, internal controls are virtually nonexistent, with complete failures in personnel management, funds, and anti-money laundering.
</blockquote>
<h2>Frequent &#34;warnings&#34; from local regulatory authorities</h2>
Zhitang has found that local regulatory authorities have frequently warned about the risks of illegal insurance intermediaries over the past year.
The Heilongjiang Regulatory Bureau of the National Financial Regulatory Administration discovered during routine supervision that there are institutions with names containing &#34;insurance claims, insurance consulting, insurance services,&#34; which do not possess the qualifications for insurance intermediary business and cannot operate insurance business.
The aforementioned regulatory authority also stated that consumers can log onto the &#34;Insurance Intermediary Cloud Platform&#34; to check the operational qualifications of institutions and the professional information of practitioners before purchasing insurance products or receiving related services.
The Xiamen Regulatory Bureau listed illegal insurance intermediary agencies that infringe on the legitimate rights and interests of financial consumers under the guise of &#34;agency for policy cancellation,&#34; &#34;agency for claims,&#34; and &#34;agency for sales.&#34;
The specific &#34;tricks&#34; are as follows:
Type 1: &#34;Full Refund&#34; Trap
Forms of expression: Criminals claim through social platforms, phone messages, and other channels that they can &#34;assist in full insurance refunds&#34; and &#34;no charge if unsuccessful,&#34; enticing financial consumers to entrust them with handling refund services.
Criminals typically charge a fee as a percentage of the refund amount as a service charge, and even defraud upfront fees under the guise of &#34;deposit&#34; or &#34;guarantee.&#34; Financial consumers ultimately suffer losses far exceeding normal refunds, while also losing their original insurance coverage, and may even face legal liability for forgery of evidence.
Type 2: &#34;Personal Injury Scalper&#34; Scheme
Forms of expression: Actively approaching victims at the accident scene or near hospitals, using &#34;high compensation&#34; and &#34;quick claims&#34; as bait to entice victims to entrust them as agents.
Financial consumers not only pay high fees, but their personal sensitive information (such as ID card numbers and bank card numbers) may also be sold by criminals for fraud, lending, and other illegal activities.
Type 3: &#34;Comprehensive Insurance&#34; Scam
Forms of expression: Criminals pose as insurance company staff, misleading financial consumers into purchasing &#34;motor vehicle safety comprehensive services&#34; under the guise of &#34;regular commercial vehicle insurance.&#34;
Methods: Attracting financial consumers with low prices and charging fees under the name of &#34;regular insurance company&#34; or &#34;sales agent.&#34;
Operators of such businesses are not licensed insurance institutions, and once a traffic accident occurs, financial consumers may face the risk of not receiving adequate compensation.
<h2>Not Just Insurance Intermediaries &#34;Slimming Down&#34;</h2>
Research by ZhiShiTang found that the current reform of the insurance industry in China involves two parallel but independent sales teams:
The first is the sales personnel of insurance intermediary institutions mentioned above: they are employed by third-party organizations independent of insurance companies, such as insurance brokerage firms or professional agency companies, and are dedicated to the sales and service of insurance products.
The second is insurance company agents (commonly referred to as &#34;marketers&#34;): individuals who sign contracts directly with life insurance companies and represent the company in selling products, belonging to the management system of the insurance company.
The identities, affiliations, and regulatory rules of the two are different.
It is noteworthy that while vigorously cleaning up &#34;shell&#34; intermediary institutions, the agent team of insurance companies has also undergone deep adjustments.
The &#34;2025 China Insurance Intermediary Market Ecology White Paper,&#34; co-authored by Peking University HSBC Business School, shows that by the end of 2024, the number of registered agents (i.e., marketers) in life insurance companies is 2.64 million.
These personnel mainly sell products that guarantee &#34;human life and health,&#34; such as life insurance, health insurance, and accident insurance.
This number has significantly decreased by more than 70% compared to the peak of 9.12 million in 2019, but the decline has narrowed compared to 2.81 million at the end of 2023.
It is noteworthy that although the number of marketers has been significantly reduced, the overall development quality of the industry is improving. In 2024, the insurance depth in China reached 4.2% (i.e., the proportion of premiums to GDP), higher than 4.07% in 2023; insurance density (per capita premium) increased from 3,635 yuan to 4,046 yuan.
This indicates that while the number of agents has been significantly streamlined, national premium income is still growing, reflecting that the current agent team of insurance companies is becoming more efficient and professional, and customer willingness to insure continues to strengthen

MCHI

The major cleanup of insurance intermediaries: why it concerns every policyholder

- On February 27, the National Financial Regulatory Administration released recent data on the insurance intermediary market reform initiated in 2024, which has seen significant regulatory actions.  
- A total of three insurance intermediary groups and 57 professional intermediary entities have been revoked, alongside the closure of 3,730 branches and 226 part-time agencies.  
- This reform aims to enhance market integrity and protect consumers from illegal practices within the insurance sector, ensuring better service delivery and accountability.

Over 3,000 companies cleared out! What’s going on with this "major action" in China's insurance industry?