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Health insurance market in China report by daxue consulting asian risks

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Health insurance market in China report by daxue consulting asian risks

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The growing health awarness among Chinese consumers ptomoted the developing of China's health insurance industry. How COVID-19 changed the health insurance consumer base? What's the development path of China's health insurance industry. Is the sales channels of health insurance changed? A comprehensive report offered by daxue consulting about China's health insurance market.

The growing health awarness among Chinese consumers ptomoted the developing of China's health insurance industry. How COVID-19 changed the health insurance consumer base? What's the development path of China's health insurance industry. Is the sales channels of health insurance changed? A comprehensive report offered by daxue consulting about China's health insurance market.

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Health insurance market in China report by daxue consulting asian risks

  1. 1. TO ACCESS MORE INFORMATION ON THE INSURANCE MARKET IN CHINA, PLEASE CONTACT DX@DAXUECONSULTING.COM dx@daxueconsulting.com +86 (21) 5386 0380 January 2021 HONG KONG | BEIJING | SHANGHAI www.daxueconsulting.com The health insurance market in China
  2. 2. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED 2 The market dynamics of health insurance in China 1. Internet has been one of the most important sales channels 2. 03 11 17 Main players in the health insurance market 3. CONTENT OUTLINE
  3. 3. 3 © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED The market dynamics of health insurance in China 1
  4. 4. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED Chinese people increasingly value health 4 0.2 Healthcare and medical expenditures (% of Chinese people’s total expenditures) Food, tobacco & alcohol expenditures (% of Chinese people’s total expenditures) Source: Suning finance designed by Daxue consulting -51% +500% During the last 30 years, the proportion of Chinese households’ spending on food, tobacco and alcohol declined. On the contrary, they increased their healthcare and medical budget, which means there is a growing consumption potential for health products in both urban and rural areas. +550% -48%
  5. 5. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED The weight of China’s health insurance grows year after year 5 4.6% 4.9% 5.9% 6.4% 7.9% 10% 13% 12% 14.3% 6.4% 7.2% 8.4% 10.2% 12.2% 14.8% 18.2% 16.9% 21% 2010 2011 2012 2013 2014 2015 2016 2017 2018 Proportion of health insurance‘s premium income (commercial and national) in China Proportion in the whole insurance industry income Proportion in life insurance income Source: Shanghai Institute of Health Sciences designed by Daxue consulting Among all kinds of commercial insurance in China, the proportion of health insurance keeps increasing as Chinese people’s health awareness is growing. Before, senior citizens and parents were the main buyers, now unmarried young people have higher demand for health insurance. In addition, insurance companies developed online sales channels to quickly reach consumers.
  6. 6. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED Health insurance premium fell after COVID-19’s critical period, mirroring SARS 6 309% 265% 158% 131% 2003 May 2003 June 2003 July 2003 Auguest Life insurance (include health insurance) premium income growth rate -45.5% 56.9% -18.3% 268.9% 120.3% 58.3% 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 Health insurance premium income growth rate COVID-19 in China SARS in China Source: CBIRC, China Daily designed by Daxue consulting The most critical time of COVID-19 in China The most critical time of SARS During the SARS premium income growth trend, health insurance demand peaked during the most serious period. Then, it decreased rapidly after the period past. In 2020 the growth trend followed the same track as that in 2003. Food delivery employees and couriers were the main new consumers during COVID-19, as the pandemic became less critical in China, the income figure dropped rapidly.
  7. 7. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED Post-90’s women from tier 1 cities want to know more about health insurance 7 7rd Suzhou 1st Beijing 2nd Shanghai 3rd Hangzhou 4th Shenzhen 5th Guangzhou 6th Chengdu 8th Wuhan 9th Zhengzhou 10th Changsha 61.73% 38.27% Age groups Percentage in age groups 20-29 53.6% 30-39 31.9% 40-49 7.7% People who searched for “health insurance” mainly come from first-tier cities and new tier-1 cities. The reason is that the persons in tier 1 cities are are under larger work and living pressure than persons from other cities. Therefore, they have more demand for health insurance to cover the risk of being sick caused by fast-paced life. Search index High Low Gender distribution of people who searched “health insurance” on Baidu (December 2020) Age distribution of people who searched “health insurance” on Baidu (December 2020) City distribution of people who searched “health insurance” on Baidu (December 2020) Source: Baidu index designed by Daxue consulting Compared to men, Chinese women are more keen to know about health insurance. Meanwhile, Post-90s and Gen-Z (people born between 1995-2009) both showed more interest in health insurance than middle-aged people, which means young people’s health awareness is rising. New tier-1 cities= cities that do not equal the traditional first tier cities, such as Shanghai but stand out beyond other tier 2 cities.
  8. 8. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED The health insurance consumer base shifted during COVID-19 COVID-19 made health insurance acquire new customers and new markets at a low cost. 8 30% X2 X2 Source: CBN data, Alipay, designed by Daxue consulting In February 2020, employees from express, ride-hailing, and food delivery industries accounted for 30% of health insurance sales. In December 2019, the percentage was only 17%. Compared to December 2019, health insurance products purchased by Chinese post-90s generations doubled in February 2020. COVID-19 increased their health awareness and many of them gradually are founding their own families, thus, they not only bought health insurance for themselves, but also for their children, husband, wife and parents. Compared to December 2019, health insurance products sales from tier-3 and lower tier cities doubled in February 2020. Growing faster than tier-1 and 2-cities. Of health insurance orders Orders increased Orders increased
  9. 9. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED China‘s health insurance still has a long way to go 9 Life insurance 30% Property insurance 26% Health insurance 44% Distribution of premium income in USA by different type of insurance (2017) Property insurance 17% Health insurance 9% Life insurance 74% Distribution of premium income in China by different type of insurance (2019) Source: NAIC, Qianzhan designed by Daxue consulting X 5 Both of China‘s health insurance market share and premium income are only a quarter of that in the USA.
  10. 10. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED 1/3 of medical treatment fees are not covered by insurance 10 Proportion of medical treatment costs that covered by insurance in major countries (2017) Economy Self-paying National health insurance Commercial health insurance Emerging market economy countries (average) 35.8% 52.5% 11.5% Asia excluding Japan 34.5% 54.9% 10.4% China 33.8% 55.8% 10.3% Latin America 32.1% 52.6% 15.1% India 58.2% 32.2% 9.5% Developed economies (average) 14.7% 61.1% 24.1% USA 11.8% 47.1% 41.1% Eurozone 14.1% 76.1% 9.7% X 2 Source: Carlyle designed by Daxue consulting In China, commercial health insurance only covers 1/10 of medical treatment, which is half of developed economies. There is still a large potential to grow. The self-paying part of medical fee is the twice of developed economies. The commercial health insurance in developed economies usually plays a much more important role than China.
  11. 11. 11 © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED 2 Internet has been one of the most important sales channels
  12. 12. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED Online insurance sales rely on third-party platforms 12 4.2 8.7 15.3 20.1 23.8 142.4 171 123 99.2 162 2015 2016 2017 2018 2019 The distribution of life insurance (include health insurance) premium income in China (billion RMB) Premium income from self-operated platforms Premium income from third-party platforms 97.2% 95.2% 88.9% 83.1% 87.2% 2.8% 4.8% 11.1% 16.9% 12.8% 2015 2016 2017 2018 2019 The distribution of life insurance premium income (including health insurance) proportion The percentage of third-party platforms' premium income The percentage of self-operated platforms' premium income Source: Insurance Association of China designed by Daxue consulting In order to expand distribution channels, Chinese insurance companies are not only selling products on public online marketplaces such as Alipay and JD, but are also building self-operated platforms to gain private traffic, such as WeChat public accounts and mini-programs. The premium income from self-operated platforms have been of the rise in the last five years, especially in 2017 and 2018 when third-party platforms‘ performance was unsatisfactory. This means private traffic is becoming more important for insurance companies.
  13. 13. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED Health insurance apps gained attraction in 2020 13 Insurance company self-operated apps Third-party insurance sales apps App name Monthly active users (Nov. 2020 million users) Month-on-month growth App name Monthly active users (Nov. 2020 million users) Month-on-month growth China Life Insurance 5 2.8% Industrial and Commercial Bank of China 76.4 5.9% China Pacific Insurance 4.7 4% Ping An Health Insurance 3.3 4% China Construction Bank 70.7 4% People's Insurance Company of China 1.6 0.5% Source: Analysis, designed by Daxue consulting Bank apps The monthly active users of insurance companies’ apps is rising. China Life insurance had the largest number of active users in November 2020, whereas China Pacific Insurance and Ping An Health Insurance grew faster than other insurance apps. Large brands have an obvious advantage as they have a large consumer base. Besides insurance companies, bank apps also sell health insurance, including their own insurance products and other companies’ products. The big number of users of bank apps are potential drivers for growth of health insurance sales.
  14. 14. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED More Chinese people search for health insurance on mobile vs PC Mobile phones show high potential for health insurance sales. 14 Search index of “health insurance” on Baidu (PC) (07.2011-01.2021) Search index of “health insurance” on Baidu (mobile app) (07.2011-01.2021) 200 300 The search index of health insurance from mobile internet tripled in the last 10 years. In turn, the search index growth of health insurance on Baidu by computer was much slower. It shows that mobile internet has more potential than pc on health insurance sales. This also explains why insurance companies are spending considerable efforts on developing their self-operated mobile apps, WeChat channels and mobile friendly websites. Source: Baidu index designed by Daxue consulting 220 360
  15. 15. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED Where do Chinese people buy health insurance? 15 China’s insurance companies developed more online sales channels such as official websites, mobile apps and WeChat mini-programs. Those channels brought more private traffic for insurance companies, which allows insurance companies to engage with consumers more easily. Meanwhile, Chinese consumers have strong intentions to search and buy health insurance on company websites and mobile apps. 3. Purchase online: website 3. Telephone sales 4. Purchase online: WeChat 4. Sales contact Search company name Click immediately insure Go to product’s page in WeChat mini-program Click insurance specialist appointment Wait for the phone call Search top 10 companies 1. Search insurance companies on Baidu OR 2. Search products on company official websites
  16. 16. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED Mobile apps make purchasing health insurance much easier 16 Search insurance on the Alipay app. In the mini-program, consumers can ask question to a customer service robot or purchase insurance through Alipay. Consumers can buy insurance on monthly instalments. But the mobile apps don’t have sales staff to verify terms in the insurance. So, consumers have to understand the terms by themselves. When consumers purchase health insurance, they can additionally choose a medical treatment insurance products. Find the mini-program for insurance on the first page.
  17. 17. 17 © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED 3 Main players in the health insurance market
  18. 18. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED Top players dominate China’s health insurance market 18 Level 1 Insurance groups with more than 10 billion RMB revenue • PingAn Insurance Group • Premium income: 173.7 billion yuan • Market share: 31.9% Level 2 Insurance companies with 10 billion RMB revenue • Chinese brands: Hexie Health Insurance, New China Life Insurance, PICC and so on. • Foreign brands: AIA Level 3 Insurance companies around 1 billion RMB revenue • 12 Chinese capital life insurance companies • 10 foreign life insurance companies • 4 Chinese capital property insurance companies Level 4 The rest of insurance companies Pyramid of health insurance companies in China by revenue (2018) 90.1 83.6 33 42.6 15.8% 15.6% 14.0% 34.8% 36.1% 23.5% 59.9% 36.2% China Ping An Insurance China Life Insurance China Pacific Insurance New China Life Insurance China’s top 4 listed health insurance companies’ premium income (2018, billion yuan) Health insurance premium income Percentage of healthcare insurance in gross premium income Year-on-year growth China Pacific Insurance had the lowest premium income However, its YoY growth rate is the highest Source: Qianzhan designed by Daxue consulting Health insurance in China is in high concentration. Top 10 accounts for 80% of the health insurance market share. Compared to smaller players, those companies have professional insurance agents, fast claim system settlement, broader products and strong brand recognition among Chinese consumers. China Pacific insurance has grown fast as the German insurer Allianz SE set up a joined-venture with China Pacific Insurance in 2014. The new company focuses on China‘s health insurance market. CPIC offers distribution channels. Allianz provides selling experience and health insurance product design. PingAn Insurance holds a third of China’s health insurance market share.
  19. 19. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED Competition in the online market becomes gradually fierce 19 4% 23% 61% 12% Health insurance products share by online sales (2019) Cancer insurance Critical illness insurance Expense reimbursement medical insurance Other illness insurance Top 10 players that selling life insurance online (2019) Rank Insurance company Premium income (billion yuan) 1 Guohua Life(国华人寿) 38.0 2 China-post Life(中邮人寿) 31.9 3 ICBC-AXA(工银安盛人寿) 29.5 4 CCB-Life(建信人寿) 14.8 5 China PingAn life(平安人寿) 12.0 6 China Life(中国人寿) 7.9 7 HongKang Life(弘康人寿) 7.5 8 PICC Health(人民健康) 7.0 9 ABC Life(农银人寿) 7.0 10 PICC Life(人民人寿) 6.8 Top 10 players account for 87% of total life insurance premium income in 2019 Source: Insurance Association of China designed by Daxue consulting Online insurance isn’t very profitable due to fierce competition. Customers can make an in-depth comparison by themselves through online product information, then pick the most economical one. This is why some companies only list basic info of their products online and ask for customers’ phone numbers, then promote products via phone call. Health insurance based on indemnification of actual expenses is the largest part of health insurance sales as online health insurance products are limited by the lack of face-to-face communication, so both customer and insurance companies are relatively conservative. Last but not least, small challengers may appear in the online insurance market. Some smaller companies may have the chance to overtake large players. For example, Yingda Taihe Life Insurance premium income grew 700-fold from 2018 to 2019.
  20. 20. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED China’s critical illness insurance products have similar policies Most critical illness insurance products have similar policies for insured people’s claim. 20 Darwin No.3 Price for male and female consumers 8,990 yuan/year 8,085 yuan/year 10,380 yuan/year 9,440 yuan/year Bai Hui Bao People who purchased this insurance can claim 180% of the indemnity limit for a critical illness before 60 years old. This insurance provides 2 kinds of compensation for minor and severe cardiovascular and cerebrovascular diseases. It also offers an optional upgrade for death compensation and 150% compensation for specific critical illnesses. Insured age: 0-55 years old Applicants’ occupations: type 1-4 * Insured age: 0-55 years old Applicants’ occupations: type 1-6 * Consumers can claim 160% of the indemnity limit for critical diseases before 59 years old. Moreover, consumers have the second claim for cancer without extra fee after 3 years of the first claim. If a second claim occurs regarding a cerebrovascular disease then the client needs to pay additional premium. 7,875 yuan/year 7,100 yuan/year Worry-free life Insured people can claim 65% of the indemnity limit for moderate illnesses, 55% for minor illnesses and 160% of indemnity limit for severe illnesses before 60 years old. After 3 years of the first insurance claim, consumers can have second claim for cancer and cardiovascular diseases. But the second claim requires additional premium. Insured age: 0-55 years old Applicants’ occupations: type 1-4 * * Applicant's occupations are ranked by their risks. Type 1 is the lowest, 6 is the highest.
  21. 21. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED PingAn offers exclusive health insurance to high income people 21 Source: PingAn insurance website designed by Daxue consulting PingAn’s health insurance is specially designed for high-income people who travel all year around. PingAn’s exclusive health insurance product costs from 49,362 yuan to 52,328 yuan a year. Compared with other health insurance products (2,000 yuan/year), this insurance product greatly saves the insureds’ time and provides more professional and convenient medical services. The insurance covers medical services both in China and overseas. It covers ordinary disease expenditure and claims including aids, mental disease, hospice care, and infertility. In addition, after an accident occurs abroad, the insured can be repatriated to China for treatment. This product also offers overseas specialist online medical consultants. The customers can have surgery and hospitalization in top hospitals within ten days. In hospitals that have cooperation with PingAn, customers do not need to pay the expenses covered by this insurance. Prevent Diagnose Treatment Recovery Nurse Intervene Ful land round Healthcare Domestic & foreign Public & private Outpatient clinic & hospitalization Stable Medical support Traditional Chinese medicine Dentistry Mental disorders Health examination Affluent Treatment content Exclusive services offered by PingAn’s health insurance
  22. 22. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED The standard cancer medical insurance for senior citizens 22 Personal cancer medical insurance Insured age: 45-80 years old To ensure insured applicants haven’t had cancer before taking out insurance, there is a waiting time is 90 days in the insurance contract But if the insured person worked in a chemistry related job, he/she can’t be insured by this product. This includes miners, chemical production workers, welders and so on People with Chronic illnesses, such as high blood pressure, high blood sugar, hyperlipidemia, can buy this insurance This insurance is only for cancer illness costs, inherited disease, occupational disease, and congenital disease are not covered Product price: Applicants who have no national medical insurance pay 961 yuan/year Applicants who have national medical insurance pay 601 yuan/year + Malignant tumors require special medical insurance 423 yuan/year + Proton therapy medical insurance 29 yuan/year (only can appointed Shanghai proton therapy center)? Source: CPIC insurance website designed by Daxue consulting Critical illness green channel (once a year): Expert clinic appointed within 7 days VIP ward? and surgery arrange as early as possible Domestic expert doctor secondary treatment Panoramic gene detection Claim method: telephone or offline counter, no advance payment China’s growing elder population created a huge demand for medical insurance, products targeting senior citizens are more and more common.
  23. 23. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED PICC combines women’s health insurance & postoperative plastic surgery 23 Uterus Cervix Breast Vagina Fallopian tubes Ovaries Basic disease limit of indemnity : 35,000 yuan One-time surgery limit of indemnity (hysterectomy & oophorectomy * ): 6,000 yuan Postoperative plastic surgery limit of indemnity : 6,000 yuan Applicant age: 20-65 Premium cost: 219 yuan/year Contractual waiting period: 60 days * Hysterectomy is all uterus cut surgeries; oophorectomy is all ovary cut surgeries Source: PICC insurance website designed by Daxue consulting This product insures 6 major primary malignant tumor, systemic lupus erythematosus complicated with renal impairment (renal failure, uremia). If applicant has 2 cancers at the same time. This insurance offers to the client a double limit of indemnity. In the meantime, it also covers the costs of breast reconstruction surgery for cancer. But according one of the most top surgery hospitals in China (Shanghai Ninth People‘s Hospital), the surgery price range is from 50,000 to 100,000 yuan. Therefore, this insurance only can cover a small part of the breast reconstruction fee. PICC covers post-mastectomy plastic surgery, which helps women regain confidence after breast cancer surgery.
  24. 24. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED 24 ABOUT
  25. 25. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED Insurance broker in China Entrepreneurship is associated with risks, let’s turn risks into gains 25 Asian Risks Management Services Limited (ARMS) advises corporates on insurable risks in China, individuals on medical insurance and home insurance. With a presence in Beijing and Shanghai, we provide services all over China. INDEPENDENT from any insurance providers, ARMS combines international and local expertise in the insurance industry with more than 15 years of presence in the Chinese insurance market, we act to the BEST INTERESTS of our clients. Life Insurance 人寿保险 Employee Benefits 员工福利 General Insurance 综合保险 Medical Insurance 医疗保险
  26. 26. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED Have access now to our risk mitigation solutions in China Asian Risks Management Services offers tailor-made and innovative insurance solutions for corporates and individuals 26 CONTACT US 010-6500 3217 www.asian-risks.com info@asian-risks.com Etc… Property All Risks Business Interruption Employers Liability High-end Medical Insurance Public Liability FOLLOW US
  27. 27. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED 27 ABOUT
  28. 28. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED Who we are 28 Covered Tier-1 cities Covered Tier-2 cities Covered Tier-3 (and below) cities We are daxue consulting: • A market research firm specializing on the Chinese market since 2010 • With 3 offices in China: in Shanghai, Beijing and Hong Kong • Employing 40+ full-time consultants • Full, complete, national coverage • Efficient and reliable fieldwork execution across China • Using our expertise to draw precise, reliable recommendations • With key accounts from around the world Your Market Research Company in China 北京 BEIJING, CHINA Room 726, Building 1, 40 Dongzhong Road, Dongcheng District 上海 SHANGHAI, CHINA (Head Office) Room 504, 768 Xietu Road, Huangpu District
  29. 29. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED Our past and current clients 350+ clients with 600+ projects for the past 7 years 29
  30. 30. © 2021 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES ALL RIGHTS RESERVED A recognized expertise on the Chinese market Regularly featured and quoted in global publications Daxue latest quotations in recent publications 30

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