FINANCE

Analysis: China’s Insurance Reform Brings Clarity and Volatility

Published: Mar. 23, 2026 1:55 p.m. GMT+8

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China’s sweeping overhaul of insurance accounting is making balance sheets clearer, but also more volatile.

A 2026 deadline has taken effect requiring insurers to adopt new international standards, aimed at giving investors and regulators a clearer view of financial health. But the transition has proved disruptive, with some companies reporting sharp swings in profits and net assets while still producing financial statements under legacy rules.

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China’s 2026 insurance accounting reform adopts new international standards, increasing transparency but also causing profit and net asset volatility.
Lower discount rates under the new rules raise future liabilities’ present value, requiring more reserves and impacting insurers’ balance sheets.
Regulators are considering adjustments and gradual alignment to manage volatility and stability during the dual-system transition period.

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Who’s Who

Sunshine Insurance Group Co. Ltd.: Sunshine Insurance Group Co. Ltd. provided statistics on 58 non-listed life insurers. Their data indicates that companies adopting new international accounting standards saw a sharp decline in combined net assets from the previous year in 2024, whereas those still using old rules reported gains. This highlights the volatility introduced by the accounting overhaul.

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What Happened When

2024：: Among 58 non-listed life insurers, those that had implemented the new standards saw a sharp fall in combined net assets from the previous year, according to Sunshine Insurance Group Co. Ltd. statistics.

2026：: A deadline has taken effect requiring insurers to adopt new international standards for insurance accounting.

As of 2026：: The transition to new accounting standards is incomplete; insurers are producing financial statements under both new and old standards, adding complexity and cost.

As of 2026：: Key regulatory frameworks, including solvency assessments and dividend policies, remain partly tied to the old rules despite the introduction of new accounting standards.

In 2026：: Regulators are exploring ways to align the old and new systems while maintaining stability in industry solvency, with small-scale tests underway.

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