Ping An Property & Casualty's 'storm of regulatory fines,' Longquan's 'strategy to break the deadlock'

In the first half of 2026, Ping An Property & Casualty Insurance is experiencing an unusually turbulent 'spring of challenges.'

More than 20 branches of Ping An Property & Casualty Insurance have successively received regulatory fines totaling nearly 8 million yuan. From the Changchun Central Branch in Jilin having its fuel-powered vehicle insurance business suspended for 10 days, to the Yunnan branch being held accountable for paying excessive commissions, this trillion-yuan-scale property insurer now finds itself at the center of a compliance storm.

Is this 8 million yuan fine merely a case of compliance failure—or a necessary step on the path toward high-quality development?

The Truth Behind the 8 Million Yuan Fine

In the first quarter of 2026, Ping An Property & Casualty Insurance reported a 6.8% year-over-year increase in premium income, but net profit declined by 13.4% year-over-year.

(Source: Ping An Insurance Financial Report)

Ongoing comprehensive auto insurance reforms and excessively high claim payout ratios for new energy vehicles are squeezing profit margins. On one side lies a saturated market; on the other, rigid KPI targets and fierce battles for market share.

In an effort to protect their market share and meet preset performance targets, some frontline departments have strayed entirely from the path of compliance, resorting to improper practices such as falsifying expenses, fabricating intermediary services, and paying excessive commissions in violation of regulations—all to maintain a temporary façade of success.

In fact, the RMB 8 million penalty serves as both pressure for Ping An Property & Casualty Insurance to drive internal reform and a precisely targeted strike addressing chronic pain points across the entire industry.

First, penalties have shifted from targeting only institutions to a dual-penalty system, significantly raising the cost of financial misconduct.Unlike past practices that penalized only institutions but not individuals, this round of regulatory enforcement has implemented a 'dual-penalty' approach, intensifying oversight.

This wave of regulatory penalties has affected multiple branches of Ping An Property & Casualty Insurance and implicated senior management. Peng Ju, Party Secretary and General Manager of the Yunnan Branch, and others were collectively fined RMB 140,000, while the fuel-powered auto insurance business of the Changchun Central Sub-branch was forced to suspend operations for 10 days.

This also signals that the property & casualty insurance industry has bid farewell to an era characterized by wide tolerance for violations and low costs of misconduct—compliance has now become the lifeline for every company and individual.

Second, regulators are precisely targeting systemic malpractices, with industry leaders serving as the key突破口 for reform.The current 'quoted-practice alignment' crackdown extends beyond bank-insurance channels to encompass the entire property & casualty insurance supply chain. Regulators have a clear objective: target leading enterprises, set industry benchmarks, clean up market disorder, and establish sector-wide rules.

Only when top-tier firms abandon aggressive, land-grabbing tactics—such as excessive spending and cut-throat pricing—can the entire industry return to a path of healthy development.

Finally, while penalty notices themselves may expire, compliance records remain a critical factor influencing valuation.Previously, investors placed greater emphasis on the growth rate of premium income; now, sound operations, robust compliance frameworks, and high-quality earnings are the key drivers of valuation.

At this stage, outdated management practices will inevitably hinder corporate development. For Ping An Property & Casualty Insurance, improved compliance standards will ultimately translate into greater market recognition and enhanced business reputation.

Longquan’s 'gear-shifting period'

The first half of 2026, marked by a string of regulatory penalties, was also a period during which Ping An Property & Casualty Insurance undertook internal governance restructuring and leadership transitions.

On one hand, reforms initiated at the group level experienced implementation lags, creating temporary gaps in internal controls.In May 2026, Ping An Group implemented major governance reforms, abolishing its supervisory board system and integrating supervisory functions into the audit committee to enhance its risk control framework and strengthen company-wide compliance awareness.

To meet evolving corporate development needs, Longquan comprehensively overhauled and upgraded internal control systems related to Ping An Property & Casualty Insurance. Leadership transitions at large financial institutions typically follow a top-down cascade model, which often results in prolonged implementation timelines and sluggish responsiveness. Given this context, inadequate handovers or insufficiently enforced internal monitoring measures likely contributed to the repeated compliance violations observed in the first half of the year.

On the other hand, the transition between outgoing and incoming teams has led to pronounced teething problems.In March 2026, Ping An Property & Casualty Insurance underwent significant senior leadership changes: Cao Jingzhi and Li Yanan, representing the post-70s and post-80s generations, were promoted to Assistant General Managers, overseeing actuarial risk management and investment operations, thereby broadening the strategic perspective of the company’s decision-making layer. In April, CEO Shi Liangxun stepped down from his role as a director but remained in his positions as General Manager and Chief Compliance Officer, resulting in partial adjustments to the executive leadership team.

However, leadership transitions require an extended period of adjustment, and a compliance culture cannot be established through rules and regulations alone—it demands time to mature and consistent institutional reinforcement.

Regulatory governance is not simply about imposing penalties and moving on; it requires the insurance industry to genuinely abandon the mindset of 'making temporary fixes during inspections and reverting to non-compliance afterward,' ensuring that the principle of 'quoted rates aligning with actual practices' becomes a fundamental requirement in daily corporate management.

Ping An Property & Casualty's compliance remediation is not a one-off, localized initiative but an enduring priority that must accompany its pursuit of high-quality development. It demands a top-down reshaping of compliance culture, internalizing regulatory requirements into the voluntary conduct of all employees and embedding them into every operational process to achieve genuine compliance.

The current compliance-related challenges represent a necessary phase for Longquan Team as it restructures its management system, replaces personnel, and undergoes transformation and development.

The 'Matthew Effect' in the Era of存量 Competition

By 2026, the property and casualty insurance industry has already entered a fiercely competitive phase of存量 (existing-market) competition.

The Matthew Effect continues to intensify, with market leaders growing ever stronger, leaving increasingly narrow room for smaller and medium-sized insurers, while the dominant position of leading insurance firms in the market has further solidified.

According to industry statistics for the first quarter of 2026, approximately one-third of China’s property and casualty insurers reported declining profitability, and industry consolidation has accelerated. The traditional 'Big Three'—PICC, Ping An, and China Pacific Insurance—accounted for 83.17% of the industry’s total net profit, reflecting a pronounced concentration of profits among market leaders.

(Source: 13 Actuaries)

Despite repeated regulatory penalties, Ping An Property & Casualty has still achieved substantial growth in premium income and firmly maintained its leadership position in the industry. Following comprehensive compliance audits and remediation efforts, the company has not only facilitated the exit of inefficient or non-compliant entities from the market but also significantly enhanced its own market competitiveness and risk resilience.

Among property insurance segments, new energy vehicle insurance is considered one of the most promising and strategically important lines of business.In the first quarter of 2026, Ping An Property & Casualty Insurance's premium income from its new energy vehicle (NEV) insurance business rose 16.1% year-over-year, and the segment has already begun turning a profit. From an industry-wide perspective, however, the combined ratio for NEV insurance remains elevated, and the sector as a whole has yet to reach breakeven.

However, the company’s individual profitability stands in stark contrast to widespread losses across the industry. Coupled with a recent surge in regulatory penalties and mounting public scrutiny, Ping An Property & Casualty now urgently needs to move beyond traditional, inefficient management practices. It must leverage technological innovation to overhaul its risk control mechanisms and explore sustainable profit models, thereby strengthening its foundation for long-term, stable growth.

In response, Ping An Property & Casualty is addressing operational challenges by optimizing its business mix.While scaling back on traditional lines of business, the company has significantly reduced its exposure to controversial credit guarantee insurance products. Instead, it is focusing on non-auto insurance niches—such as cargo insurance—that offer clear differentiation, manageable risk, and higher returns, aiming to achieve steady growth.

This refined approach—'reducing inefficiency, stabilizing long-term performance, and enhancing value'—moves away from reliance on unproductive scale expansion. Although it may cause short-term disruption to operations, it is ultimately the only path to solidifying profitability and returning to a value-driven enterprise model. The current wave of regulatory reforms has imposed strong external pressure, accelerating this transformation.

Within Ping An Group’s integrated financial model of 'insurance + banking + asset management,' property & casualty insurance serves not only as a profit center but also as a high-frequency entry point for customer acquisition and engagement.Ping An Property & Casualty uses its one-stop auto insurance service as a strategic gateway to connect with Ping An Group’s 251 million individual customers and 4 million corporate clients, making it a critical platform for cross-selling and ecosystem synergy across the group.

Therefore, the compliance overhaul led by Long Quan in the property & casualty business is not merely a course correction for a single line of business; it is a core strategic initiative to safeguard the integrity of Ping An Group’s integrated financial model and ensure the company’s long-term, healthy development.

From a 'storm of penalties' to a 'new cycle'

Viewed through the lens of industry cycles, this represents a painful but necessary reform—akin to scraping the bone to treat deep-seated illness—and offers Ping An Property & Casualty a rare opportunity to rebuild its valuation narrative in capital markets.

First, this round of 'regulatory penalties' represents a precise industry correction,forcing Ping An Property & Casualty Insurance to conduct a thorough compliance overhaul from top to bottom—eradicating misconduct at the grassroots level, cleaning up expense reporting practices, and purifying the intermediary environment—to ensure that the principle of 'quoted rates matching actual practices' is implemented in every specific business operation.

Amid increasingly stringent regulatory oversight, policyholders are also becoming more rational in their insurance purchases.

Second, technology-driven, precision-focused operational models are reshaping the structure of risk management.Under the traditional model, market expansion in this sector relied primarily on heavy human resource investment, cost-cutting, and price competition. Some companies pursued short-term economies of scale during business expansion, engaging in non-compliant practices and exposing themselves to persistent operational risks.

Ping An Property & Casualty Insurance will focus going forward on replacing traditional labor-intensive approaches with digital risk-control tools, using scientifically grounded pricing models based on actuarial theory to prevent predatory low-price competition, and leveraging precise risk-identification mechanisms to deter fraud—all while ensuring legal and compliant operations to steadily enhance profitability.

Third, as competition in the auto insurance market intensifies and price wars reach an impasse, improving service quality has become the key direction for corporate transformation.The market is gradually shifting toward a service-centric,精细化 competitive landscape. Accordingly, Ping An Auto Insurance has established a clear service differentiation advantage through its 'Triple-Free Credit Claims' offering and its end-to-end vehicle lifestyle service ecosystem.

Going forward, the company will further strengthen its strategy of integrating insurance with technology and services, expanding diversified application scenarios for claims services—including auto repair, roadside assistance, risk forecasting, and full-lifecycle mobility protection—to offset the short-term adverse impacts of compliance requirements and transition from 'price-driven commoditization' to 'value-driven growth.'

Finally, investors and the market should not overstate the short-term impact of these penalties on Ping An Property & Casualty Insurance; by the second half of 2026, changes will become evident in two key performance indicators.

First is the combined operating ratio (COR), which assesses whether compliance remediation has effectively reduced unnecessary expenses and allocated resources appropriately. Second is the effectiveness of compliance KPI implementation, which evaluates whether the new leadership team has fulfilled its compliance responsibilities and established an effective compliance management system.

In short, among the 'original trio,' whoever implements the rules most thoroughly will gain an edge in the upcoming valuation rebound.

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