The payout ratio remains low, and the short-term health insurance value for money continues to be a mystery.

In recent years, with the widespread awakening of public health awareness and the continuous improvement of multi-layered medical security systems, personal short-term health insurance products, represented by “million medical insurance,” have experienced explosive growth.

Leveraging the advantages of “low premiums and high coverage,” short-term health insurance has quickly expanded into lower-tier markets, becoming a “gateway” for hundreds of millions of citizens’ commercial medical protection. However, as the scale of short-term health insurance premiums rapidly increases, the industry’s “overall claims ratio” has also attracted widespread attention.

Recently, a reporter from 21st Century Business Herald analyzed the comprehensive claims ratio data for 59 property insurance companies’ personal short-term health insurance in 2025 and compared it with 2024. The data shows that the median comprehensive claims ratio for these companies in 2025 is only 41.09%. Among them, 34 companies saw a decrease, accounting for nearly 60%, while 6 companies reported negative values, and 4 companies had claims ratios exceeding 100%.

Experts interviewed pointed out that the claims ratio reflects not only cost structure and channel models but also reveals differences in pricing strategies and risk management capabilities. As debates about whether premiums are too high or coverage is sufficient intensify, balancing improved protection with sustainable operations has become a key challenge for the development of short-term health insurance.

More than Half of Short-term Health Insurance Claims Ratios Decline

Personal short-term health insurance refers to health insurance sold to individuals with a coverage period of one year or less, without guaranteed renewal clauses. Typical products include “million medical insurance” and “benefit insurance.”

The claims ratio is the proportion of claims paid out by the insurer relative to earned premiums, used to measure operational efficiency and risk control. Its specific formula is: Claims Ratio = (Reinsured claims paid + Reinsured outstanding claims reserve transfer difference) / Reinsured earned premiums, where outstanding claims reserves include incurred but not reported (IBNR) reserves.

The personal short-term health insurance claims ratio indicates the ratio of actual claims paid (including reserve transfer differences) to earned premiums within this business segment, usually expressed as a percentage. It mainly reflects the extent to which the product’s coverage functions are realized and is a core indicator for assessing risk pricing, claims management, and overall operational stability of insurers.

The 21st Century Business Herald’s analysis of data from 59 property insurers over the past two years shows that the median comprehensive claims ratio for 2025 is 41.09%. Year-over-year, 34 companies experienced a decline, 23 saw an increase, 1 remained unchanged, and 1 was not comparable due to no relevant business in 2024.

Among these, 18 companies had claims ratio fluctuations within 5 percentage points, including Rongtong Property & Casualty, Jintai Property & Casualty, China United Property & Casualty, Sunshine Property & Casualty, Ping An Property & Casualty, China Life Property & Casualty, PICC Property & Casualty, Taiping Property & Casualty, and ZhongAn Insurance.

In the 59 companies surveyed, the highest claims ratio in 2025 was Sunshine Agriculture Mutual, at 1103.25%.

According to the company’s official website, Sunshine Agriculture Mutual did not sell any personal short-term health insurance or incur related claims in 2024, resulting in a claims ratio of 0% for that year. By the end of February 2025, the company had two active personal short-term health insurance products, and by the end of 2025, it offered five such products. Consequently, the claims ratio for 2025 surged to 1103.25%.

Additionally, BYD Property & Casualty Insurance saw its 2024 claims ratio at -10,133.97%, which quickly rebounded to 103.99% in 2025, a swing of over 10,000 basis points over two years.

BYD Property & Casualty explained in its announcement that its personal short-term health insurance business ceased issuing new policies in July 2022 and resumed operations in March 2025. Since earned premiums were minimal during this period, the overall claims ratio deviated from initial pricing expectations. As operations progress, this indicator is expected to gradually return to anticipated levels.

Negative Values as a Result of Financial Adjustments

Looking at individual companies, there is a clear differentiation within the industry.

The top three companies with the highest comprehensive claims ratios in 2025 are Sunshine Agriculture Mutual, Anbang Property & Casualty, and Huahai Property & Casualty. The lowest three are Yanzhao Property & Casualty, Xinan Auto Insurance, and Huanong Property & Casualty.

Among the 59 companies, four reported claims ratios exceeding 100%: Sunshine Agriculture Mutual (1103.25%), Anbang Property & Casualty (124.66%), Huahai Property & Casualty (104.75%), and BYD Insurance (103.99%).

Six companies reported negative claims ratios: China Railway Property & Casualty (-0.44%), Zhufeng Property & Casualty (-3.54%), Zhongcheng Property & Casualty (-30.02%), Huanong Property & Casualty (-76.41%), Xinan Auto Insurance (-173.57%), and Yanzhao Property & Casualty (-352.06%). Notably, Yanzhao’s ratio shifted from 10.59% in 2024 to -352.06% in 2025, and Huanong’s from 12.62% to -76.41%.

Regarding the phenomenon of “negative claims ratios,” which contradicts common understanding, Dr. Zhu Junsheng, a postdoctoral fellow and professor of applied economics at Peking University, explained that a negative claims ratio in some companies generally does not mean there are no claims paid. This situation often results from reserve releases, business restructuring, or adjustments to historical data, fundamentally being a matter of financial and actuarial treatment.

“From an industry perspective, such phenomena are more common among small and medium-sized insurers, and tend to be sporadic. They also reflect industry segmentation,” Zhu said. Larger insurers benefit from bigger risk pools, more data, and more stable operations, making their claims ratios more controllable. Smaller firms, constrained by scale, product concentration, and operational stability, are more susceptible to fluctuations in claims or business adjustments, which can amplify these indicators. Therefore, this phenomenon is not widespread.

However, Zhu also pointed out that negative claims ratios highlight room for improvement in actuarial pricing, risk management, and business structuring for some institutions. If such fluctuations persist or widen, they could pose risks to operational stability.

Balancing Coverage and Sustainability

Beyond these extreme cases, the overall downward or low-level trend in industry claims ratios over the past two years warrants further analysis.

Zhu Junsheng explained that the decline in the 2025 personal short-term health insurance claims ratio is the result of multiple structural factors rather than a single shock.

First, regarding cost structure, short-term health insurance—especially million medical insurance—relies heavily on internet channels. Under a “traffic-driven” sales model, customer acquisition costs, channel expenses, and operational expenditures are high, continuously squeezing claims ratios. Second, market competition has intensified, with multiple participants maintaining high levels of channel and traffic investment over the long term, making it difficult to significantly reduce expense ratios. Third, the “one-year + adjustable rate” nature of short-term products means insurers typically reserve a safety margin in pricing, which objectively lowers the claims ratio.

He noted that the currently low claims ratios in some companies may be related to conservative pricing, strict claims standards, or service quality issues, which require careful evaluation.

Furthermore, recent market voices have attributed low claims ratios in personal short-term health insurance to excessive premiums and insufficient coverage, suggesting that insurers are profiting excessively from these products.

In response to these sharp criticisms, Professor Zhu Junsheng offered a more rational perspective.

He believes that, overall, the low claims ratios in some companies do reflect a relatively limited proportion of premiums used for actual coverage. However, this judgment should be based on a comprehensive analysis of expense levels and operational models, rather than simply equating low claims ratios with “excessive premiums.”

“There is an important but nonlinear relationship between claims ratios and consumer experience,” Zhu said. A claims ratio within a reasonable range usually indicates better coverage realization and helps build customer trust. Conversely, pursuing high claims ratios without proper risk control and expense management could undermine the company’s sustainability.

He explained that, from the perspective of commercial health insurance operation, a claims ratio around 70%—assuming reasonable expense structures—is considered ideal. Within this range, both consumer protection and product attractiveness are enhanced, while insurers retain necessary expenses and profit margins to ensure ongoing operations.

Zhu Junsheng recommended that maintaining a claims ratio within this reasonable interval generally signifies higher coverage fulfillment and customer trust; however, blindly pursuing higher claims ratios without managing risks and costs could weaken long-term viability.