Huachuang Securities: Insurance products transitioning into deep waters, dividend-focused critical illness insurance may become a new growth driver in health insurance sector.

Huachuang Securities released a research report stating that in the field of savings insurance, short-term residents with low risk preference still dominate, and dividend insurance is expected to remain the mainstream low-level. Currently, the conditions for developing into universal life insurance and investment-linked insurance are not yet in place, but may possibly transition from "high guarantee + low volatility" to "low guarantee + high volatility" mode. In the field of protection insurance, dividend-based critical illness insurance is making a comeback in the market, and with the advantage of critical illness protection lower than inflation, it is expected to become a new growth focus in the health insurance industry in 2026. Huachuang Securities' main points are as follows: Dividend insurance, once mainstream, is rising again Dividend insurance is essentially a "fixed income +" product with redemption attributes, and the income smoothing mechanism manually reduces income volatility. Before 2013, when the maximum guaranteed interest rate in the life insurance industry was 2.5%, traditional insurance had weak attractiveness, and dividend insurance held the core position in the market. After the interest rate marketization reform in 2013, traditional insurance became the dominant product for nearly a decade. However, in the background of declining interest rates, the past advantages of traditional insurance have become a stock redemption burden that insurance companies urgently need to resolve, forcing the industry to transform dividend insurance. Supply and demand resonance drives the development of dividend insurance From a company's perspective, developing dividend insurance can to a certain extent alleviate redemption pressure and dilute the existing burden. Under the new regulations, dividend insurance is applicable to VFA measurement, which can reduce the impact of investment volatility on financial statements. In addition, dividend insurance has a relatively short effective duration, which also alleviates the pressure of asset-side duration matching. From the demand side, after the asymmetric reduction of the guaranteed interest rate, the attractiveness of dividend insurance has significantly increased, and the recovery of the equity market further boosts the development of dividend insurance. International experience also confirms that in mature insurance markets, floating income products are dominant in the later stages of development. Significant competitiveness of dividend insurance products with multiple advantages Compared to similar risk preference products, dividend insurance has a redemption attribute compared to bank wealth management products. At the same time, with the recovery of the equity market, the expected return level of dividend insurance has been raised, and the advantage of yield has become more prominent. Compared to bank deposits, dividend insurance has a "lagging" advantage in the guaranteed interest rate part, and can also provide a long-term financial path for clients with maturing five-year deposits. Considering the core reliance of dividend insurance on the recovery of equities to enhance attractiveness, the bank compares index funds, dividend style funds, mixed bond funds with dividend insurance, the latter having significant advantages in stability, cross-cycle investment, and protection functions. Leveraging Channels: Deposit relocation may drive bancassurance, agents remain a competitive barrier With the significant decline in attractiveness of repricing of maturing deposits, the "high guarantee + low volatility" model of dividend insurance matches the low-risk preferences of customers, focusing on long-term value. Bancassurance may become the optimal outlet for attracting funds with low-risk preferences. In the individual insurance channel, the continued deepening of bancassurance and the complex attributes of dividend insurance both pose higher requirements for agents. After the bancassurance dividend period, high-quality agents are still the core competitive barrier for insurance companies to acquire customers and create value in the low interest rate era. Introducing new vitality with dividend insurance, geometric increase in equity allocation In 2026, residents' deposit relocation or driving new premium sales, the industry's premium scale is expected to reach 5.6 trillion yuan under a neutral scenario, of which dividend insurance premiums may contribute 2.1 trillion yuan. The structural change in premiums will promote the increase in the risk preference of the liability side of insurance funds. In a neutral scenario, it is estimated that the overall industry's equity allocation ratio will increase by 3.3 percentage points to 22.3%, with an additional equity allocation scale of approximately 1.06-1.15 trillion yuan. Risk warning: Policy changes, accelerated decline in long-term interest rates, volatility in the equity market, frequent natural disasters, unexpected transformation, modeling errors.