Over 60% of short-term health insurance claim payout rates are below 50%

As an important supplement to residents’ health protection, short-term health insurance has become widespread and serves as a key link between basic medical insurance and commercial insurance. The claim payout rate is a core metric for measuring the coverage value, pricing reasonableness, and operational sustainability of these products. According to incomplete statistics from Beijing Business Daily, as of March 8, 132 insurance companies have announced their 2025 full-year short-term health insurance claim payout rates. Overall, the current industry payout rates are not high; more than 60% of insurers have payout rates not exceeding 50%. What factors influence the payout rate of short-term health insurance? Is a higher payout rate always better? What trends can we expect in the future?

A higher payout rate is not necessarily better

Short-term health insurance refers to health insurance products sold to individuals with coverage periods of one year or less, without guaranteed renewal clauses. The most well-known examples are million-dollar medical insurance and惠民保 (Huimin Bao).

According to the “Notice on Regulating Short-term Health Insurance Business,” insurance companies should disclose the overall comprehensive claim payout rate for individual short-term health insurance business on their official websites every six months. The payout rate for the first half of the year should be disclosed no later than the end of July each year; the annual payout rate should be disclosed no later than the end of February the following year.

According to incomplete statistics from Beijing Business Daily, 132 insurers have already announced relevant indicators. The median payout rate among these 132 insurers is 42%, and the average after removing the top three and bottom three extreme values is 40.72%.

Fu Yifu, a special researcher at Sichuan Commercial Bank, told Beijing Business Daily that the payout rate of short-term health insurance is primarily influenced by product design. The stricter the coverage scope, deductible, payout ratio, and exemption clauses, the lower the payout pressure. Second, customer demographics and risk control also play a role—age, health status, and occupational risks of policyholders significantly affect claims probability, and the strictness of underwriting directly determines subsequent payouts. Additionally, external factors such as medical inflation, changes in medical behavior, and regulatory policies on health insurance can influence payout costs, collectively determining the final payout rate.

Is a higher payout rate always better? Not necessarily. If a product’s payout rate is too low, it indicates that the insurance company retains a larger proportion of the premiums paid by policyholders, making such coverage generally less cost-effective. Conversely, if the payout rate is too high, insurance companies may be unable to profit and could stop offering the product, leading to discontinuation for consumers who have purchased it over many years, which is not beneficial. Industry experts suggest that a reasonable payout rate for short-term health insurance is between 60% and 80%. This range can ensure a good claims experience for consumers while allowing insurance companies to maintain financial stability.

Based on this standard, the overall payout rate for short-term health insurance among insurers is relatively low. Currently, 86 insurers have payout rates not exceeding 50%, accounting for 65%. Fu Yifu pointed out that the industry’s overall low payout rate reflects that short-term health insurance remains in a stage of strict risk control and cautious coverage. On one hand, insurers adopt conservative underwriting and responsibility settings for profitability and safety reasons; on the other hand, issues like product homogenization and insufficient inclusive coverage limit consumers’ actual benefits.

How to enhance consumer experience

Data from the State Administration of Financial Supervision shows that in 2025, commercial health insurance premiums are expected to reach 997.3 billion yuan, just short of the industry’s anticipated trillion-yuan milestone.

As a popular product in the current health insurance market, short-term health insurance’s importance is self-evident. How to increase consumer acceptance, improve user stickiness, and raise payout rates is undoubtedly the most direct approach.

Industry insiders predict that as regulatory authorities continue to guide insurance back to its core purpose of protection, encourage the development of inclusive products, and gradually relax product responsibilities, coverage will become more comprehensive. Meanwhile, the customer base will expand to include elderly and chronic disease populations. Coupled with rising medical costs, payout expenditures are expected to steadily increase. Intensified industry competition will also push insurers to enhance coverage attractiveness and proactively offer benefits.

To truly improve consumer experience, simply increasing payout rates is not enough. Fu Yifu suggests that short-term health insurance should simplify product terms, broaden coverage, lower deductibles, and launch more inclusive versions to make protection more accessible to the general public. Service improvements should include streamlining medical treatment processes, providing health management, appointment booking, hospitalization advances, and chronic disease management as value-added services—shifting from “post-claim” to “pre- and mid-claim” support. Claims processing should be digitalized, with instant claims, direct payments, and reduced paperwork and waiting times to ensure transparency and convenience. Risk control should rely on precise underwriting and anti-fraud measures instead of excessive restrictions, balancing risk management with ease of access for normal customers’ insurance and claims.

Beijing Business Daily Reporter: Li Xiumei

(Edited by: Qian Xiaorui)