The mechanism and institutional framework of participating insurance in my countrymy country began selling participating insurance in 2000.

After less than ten years of rapid development, participating insurance has become a mainstream life insurance product. In 2008, premium income exceeded 365 billion yuan, accounting for approximately 50% of total life insurance premiums. In the first quarter of 2009, it reached 73.5%.

The key to participating insurance is the participating policy.

When insurance companies establish dividend policies, they need to coordinate market competition and operating results, smooth the relationship between long-term and short-term, and balance the interests of customers and the company.

The formulation and supervision of dividend policies are the focus of corporate management and insurance supervision, and are also the key to the dividend insurance reporting system.

1. my country’s participating insurance model Participating insurance is a type of insurance in which policyholders share operating results with the insurance company.

After paying the premium on time, the policyholder can not only enjoy the general insurance functions, but also receive regular dividends.

Due to differences in the educational background of actuaries, company status and company origins, participating insurance has formed different models in my country.

(1) Cash dividends and insured dividends The cash dividend method distributes dividends in the form of annual cash dividends.

Under the cash dividend method, policyholders can choose to use cash dividends to withdraw dividends, pay premiums, retain the dividends in the company to accumulate interest, purchase and pay off the insured amount, etc.

The choice of cash bonuses is relatively flexible and can meet customers' various needs for bonuses.

Life insurance companies in North America usually adopt this dividend distribution method.

The incremental dividend method allocates dividends in the form of an increase in the insured amount.

The policyholder receives the allocated dividends in the form of insured amount or surrender payment when an insured event occurs, expires or the policy is surrendered.

The incremental bonus consists of three parts: annual incremental bonus, special incremental bonus and terminal bonus.

The annual incremental bonus increases the insured amount at a certain percentage every year.

Special incremental dividends will only be used to increase the insured amount in a one-time manner under certain special circumstances, such as abnormal performance in the capital market or changes in government tax policies.

Terminal dividends are generally a certain proportion of distributed dividends or the total insurance amount. Part of the surplus generated during the policy period is deferred to the end of the policy period for distribution, which reduces the uncertainty of the source of dividends during the policy period and makes the annual dividend level tend to be

smooth.

British life insurance companies often use this dividend distribution method.

(2) Full differential dividends and partial differential dividends Generally, insurance companies operate dividend insurance, and their surplus mainly comes from interest spreads, fee differentials and dead spreads. Insurance surrenders, contract terminations, etc. can sometimes also bring some profits.

Identifying the sources of surplus and allocating them in a reasonable manner is the basis for the operation and supervision of participating insurance.

According to the classification of earnings distribution sources, there are two dividend modes: "full differential dividend" and "other differential dividends other than fee (or death) differential".

Under the full differential dividend model, all sources that may generate surplus participate in the distribution, that is, whether it is dead margin, interest margin, fee difference, surrender surplus, investment asset appreciation, etc., they are all included in the distribution and can be shared by participating policyholders

The policy surplus portion.

In the "Differential dividends other than fee difference (or dead difference)" mode, except that the fee difference (or dead difference) is not included in the dividend account, the other processing modes are similar to "Full Difference Dividend".

2. Four major principles that need to be followed in formulating dividend policies. Under different dividend methods and sources of surplus distribution, there are certain differences in the technical characteristics of dividends.

However, no matter what method of dividend distribution is adopted, regardless of the source of surplus distribution, the dividend policy should follow certain principles: it should not only pay attention to the reasonable expectations of policyholders, implement the principles of good faith management and fairness, but also fully consider the impact of dividend distribution on

The impact of the company’s future dividend levels, investment strategies and solvency.

(1) Meeting the reasonable expectations of policyholders. The characteristic of participating insurance is regular dividends, and the dividends are uncertain.

When policyholders purchase participating policies, they have expectations for future dividend levels.

Reasonable expectations should be respected and protected.

Policyholder expectations are often established at the guidance of the insurance company.

Insurance companies use product descriptions, policy dividend demonstrations, and the company's own dividend strategy to guide policyholders to establish certain expectations for future dividends.

Insurance companies should fully respect the reasonable expectations of policyholders when formulating dividend policies, managing dividend business, and distributing surplus.

Meeting the reasonable expectations of policyholders is not only the focus of participating insurance operations and management, but also a basic requirement to protect the interests of policyholders. It is also an effective means to prevent and resolve misleading risks and resolve conflicts of interest between policyholders and insurance companies.

In the early days of participating insurance in my country, individual life insurance companies failed to truly pay attention to the reasonable expectations of policyholders.

Misleading behaviors such as unrealistic bonus demonstrations, promises of high returns during the sales process, and concealment of uncertainty about bonuses often occur, which have adversely affected the development of participating insurance.

The insurance regulatory agencies recognized these problems and stipulated that meeting the reasonable expectations of participating insurance customers is an important responsibility of the chief actuary when establishing relevant systems.

At present, in the product development stage, insurance companies must formulate relatively complete management methods, set operating management procedures in advance, clarify various processes, and control risks.