Business insurance market in China by daxue consulting and asian risks

TO ACCESS MORE INFORMATION ON THE INSURANCEMARKET IN CHINA, PLEASE CONTACT ASIAN RISKS AT M.BURBAN@ASIAN-RISKS.COM
dx@daxueconsulting.com m.burban@asian-risks.com
The business insurance
market in China
October 2020
HONG KONG | BEIJING | SHANGHAI
www.daxueconsulting.com

© 2020 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES
ALL RIGHTS RESERVED
2
CONTENT OUTLINE
The most common insurance products
for companies
1.
Covid-19 impact on the business insurance
market
2.
03
08
12Three main players in the Chinese market3.
17Focus on insurance brokers4.

3© 2020 DAXUE CONSULTING – ASIAN RISKS MANAGEMENT SERVICES
ALL RIGHTS RESERVED
1 The most common insurance
products for companies

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Company asset insurance
4
Target risks: indirect economic losses caused by natural disasters or accidents, which affect the production,
cessation and operation of the insured business.
Characteristics: a cover that must be taken out with the property insurance.
Target risks: goods transportation losses caused by natural disasters or accidents.
Characteristics: Moving of the insurance subject matter, broader coverage of insurance.
Target risks: vehicle losses caused by natural disasters or accidents as well as the third-party liability for damages
to third parties while using vehicles legally registered to be driven on public roads.
Characteristics: risks that can be assessed with accuracy.
Target risks: material losses and expenses due to natural disasters and accidents during engineering or construction
projects, as well as economic compensation of bodily injuries or property losses to third parties.
Characteristics: high risk of underwritten insurance subject, multi-party of the insured.
Commercial property insurance
Profit loss insurance
Cargo insurance
Engineering insurance
Commercial vehicle insurance
Target risks: direct financial loss to enterprise property caused by natural disasters or accidents.
Characteristics: the insurable properties include buildings and ancillary decoration equipment, machineries,
stock, inventories.
Company asset insurance refers to insurance with subjects of companies’ tangible assets, relevant interest and liability.

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Company liability insurance
5
Target risks: accidents during production and operation activities in public venues such as schools and cinemas.
Characteristics: risks based on legal liability, wide range of application, applies to all kinds of activities.
Target risks: compensation for labor accident and occupational disease to employees.
Characteristics: contractual liability, no-fault liability, claim settlement out of control.
Target risks: compensation of financial loss while providing professional services.
Characteristics: liability related to negligent acts, errors and omissions, related to human error.
Product liability insurance
Public liability insurance
Employer liability insurance
Professional indemnity insurance
Target risks: compensation for personal injury or property damage caused by the insured product.
Characteristics: risks based on legal liability, claim settlement out of control, type of accident which will occur
everywhere.
Liability insurance refers to the form of property insurance in which the insurer bears the liability for compensation when the
insured is liable to compensate to a third party in accordance with the law.

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Credit insurance
Credit insurance refers to the insurance policy in which the insurer is liable for the economic losses suffered by the insured when the
debtor refuses to perform the contract or fails to pay off the debts.
6
Target risks: loss of accounts receivable due to commercial risk (bankruptcy, default) of buyer.
Characteristics: insurer and insured share the loss, simple risk investigation.
Target risks: economic loss due to the other party's failure to perform its obligations under a contract.
Characteristics: three parties are involved in the legal relationship, an accessory contract.
Target risks: economic loss due to dishonest behavior of employees such as theft and corruption.
Characteristics: relationship between employer and employee is involved, risk covered is limited to dishonest
behavior of employees.
Target risks: economic loss due to the failure to reach a certain level of quality of the products manufactured/sold.
Characteristics: to insure the loss of the product itself in a product accident.
Export credit insurance
Domestic credit insurance
Contract guarantee or performance bond insurance?
Product guarantee insurance
Fidelity Bond insurance
Target risks: international trade loss caused by political (war, foreign exchange control) and commercial risks
(bankruptcy, default of payment) of importing country.
Characteristics: government support, aiming at encouraging domestic exports.

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Company employees insurance
Employee insurance is a social and economic system that provides income or compensation to a population that is incapacitated,
temporarily unemployed or suffering loss due to health reasons.
7
Target risks: indemnification of medical expenses due to the illness or other medical issue of employees.
Characteristics: compensation in kind, no-fixed compensation, unavoidability and unpredictability of illness
between parties involved.
Target risks: loss of employee’s income due to pregnancy, childbirth and breastfeeding.
Characteristics: compensation is available regardless of the pregnancy outcome, maternity leave is subject to
certain requirements.
Target risks: accident-related injuries, death and permanent disabilities and high medical costs for accidents.
Characteristics: covering every class of employee from the general staff to top managers on a 24-hour basis or
only during office hours.
Endowment insurance
Medical insurance
Maternity insurance
Group accident insurance
Unemployment insurance
Target risks: worker’s income source interruption after retirement.
Characteristics: mandatory, mutuality.

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2 Covid-19 impact on the
business insurance market

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COVID-19 impact on China’s business insurance market
9
COVID-19 boosted sales of health insurance packages, but the high volume of claims put pressure on insurance companies.
However, with the government intervening and providing financial assistance, the negative impact was managed.
The employee’s health insurance
boom
There was an increased willingness
from the businesses’ side to purchase
health insurance for employees. Also,
insurance companies seized the
opportunity to launch products in
response to COVID-19, leading to a
significant increase in employee health
insurance sales.
COVID-19 has caused many companies to
suspend work and production, most of the
business travel or transportation plans
have been delayed or canceled, and the
consumption of related insurance
products have fallen. However, the
reduction in consumption of accident and
transport-related insurance is relatively
small, the overall impact was negligible.
There was a big increase in the claims of
life insurance, medical insurance and
critical illness insurance. The government
has been providing financial assistance
to insurance companies to cover the
costs of those claims, which has helped
to relieve the pressure on insurance
companies.
The sales of accident and transport
insurance decreased
Expenditures on claims
increased

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10
“COVID-19 has the following effects on Insurance
Brokers & Adjusters in China industry in China: first, the
offline marketing activities of insurance salespeople are
greatly affected, which has negative effect on the industry
revenue growth; second, the online sales of insurance
products grow rapidly and is an even more promising
sales channel for industry players”
Marc Durban, founder & CEO of ARMS

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Case study: PICC’s key COVID-19 response strategies
PICC, one of the key market players in China’s business insurance market, shared its strategy to reduce the negative impact of
Covid-19 for its business and for its clients
11
Source: official web of PICC, designed by daxue consulting
Expanded online sales channels:
Simplified insurance procedures. To support new
customers in purchasing production liability insurance
online, PICC opened more online insurance platforms
such as PICC E-App (人保E通).
Simplifying the processes of claim
payment:
For the customers who were infected by COVID-
19, PICC to launched a website page to help
them quickly finish their claims.
Provided financing services to ease the
financial pressure on enterprises:
Provide financial services for companies that purchased
safety production liability insurance.
Free extension of infectious
disease liability:
For insured enterprises, if an employee dies as a
result of COVID-19 while the business was still
producing, the insurance company paid at 100,000
RMB.
Appropriate deferment of insurance
premiums:
For small enterprises (less than 100
employees) the payment of premium for
safety production liability insurance can be
deferred for a maximum of three months.
Free extension of the
insurance period:
If the insured enterprises need to stop production and
work due to COVID-19, the period of cover can be
extended at no additional cost.
Key
strategies

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3 3 main players in the Chinese
business insurance market

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PingAn (中国平安): Diverse and detailed insurance product assortment
13
PingAn’s business insurance products widely cover most types of company risks, and there is the large span of guarantee amount.
Source: official web of PingAn, designed by daxue consulting
PingAn is the largest insurance company
in China.
Providing more than 15 kinds of corporate
insurance services.
Introduction Insurance products for companies
Medical insurance for employees,
targets 120 different diseases
Corporate group comprehensive
accident insurance for employees,
targets accident, sickness,
transportation and serious illness
Employer liability insurance, covers
death, disability and medical
expenses caused by accidents and
occupational diseases during work
Carrier liability insurance for
corporations targets damage
suffered in the carriage of goods
Trade credit insurance for
corporations targets losses on
uncollected accounts while selling
goods or provide services on credit
Insurance amount (¥)Products Coverage(¥)
Medical insurance 0.01-0.1 million
Corporate group
comprehensive
accident insurance
0.005-8 million
Employer liability
insurance
0.015-0.2 million
Small-business insurance 1-3 million
Carrier liability insurance
TBD by products category,
value, transporting ways
Trade credit insurance TBD by credit amount
Small-business insurance targets
small companies’ property,
employees and clients

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PICC (中国人保): Building targeted insurance solutions for clients
Instead of individual insurance products, PICC tends to sell business insurance in a package that targets specific types of businesses
such as PMEs, restaurants and more.
14
Source: official web of PICC
Insurance solutions for middle and small businesses Insurance solutions for restaurants
Source: official web of PICC, designed by daxue consulting
Wanchuang Insurance is a combination
insurance product specifically designed for
Small and medium enterprises in 5 industries:
accommodation, retail, wholesale, catering,
and business service.
It covers business property, employers and
employees, also the multiple legal liability
risks of employers
Jinfu Insurance is a comprehensive insurance
solution that launched for catering
companies.
It covers 3 aspects in a restaurant, property,
employee and consumer safety.
Products
Coverage
(¥)
Comprehensive
property
insurance
0.1-30 million
Cash insurance
0.003-0.9
million
Public liability
insurance
0.05-2 million
Catering liability
insurance
0.05-2 million
Employee loyalty
insurance
0.1-0.5 million
Employer's
liability
insurance
0.06-0.6 million
Accident health
insurance
0.055-0.55
million
Traffic accident
insurance
0.43-4.2 million
Products
Coverage
(¥)
Property
damage
insurance
Less than 5
million
Cash loss
insurance
Less than 0.5
million
Food safety
liability
insurance
0.1-2 million
Disability
compensation
Less than 0.5
million/person
Health care
costs
Less than 0.05
million/person
Legal fees
Less than 0.05
million

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CPIC (太平洋保险): Focusing on enterprise credit insurance
15
Source: official web of CPIC, designed by daxue consulting
Insurance amount (¥)
Introduction
Leading market share and significant market
position in various business areas such as life
insurance, property insurance and insurance
asset management.
Has 6 kinds of enterprise insurance in total.
CPIC mainly focus on company credit insurance, whether it is domestic or international trade, its products tailor to each company's
specific situation. It also launched medical insurance specialized for the breast cancer of female employees.
Insurance products for companies
Medical insurance
for female
employees with
breast cancer, the
coverage of
breast cancer
recurrence/metast
asis for stage 0-2
breast cancer.
Export credit
insurance for
small trade
enterprises
targets export
collection risk.
Enterprise
annuity
insurance aims
to improve the
social security
system, and
enhance
enterprise
cohesion.
Short-term
export credit
insurance for
trade
companies
targets the risks
of bad debt or
delinquency to
the buyers
Short-term
domestic trade
credit insurance
targets possible
bad debts or
defaults of
buyers.
Credit insurance
for commercial
contracts covers
the loss of
receivables due
to the buyer's
bankruptcy,
insolvency, or
prolonged
default.
Products
Medical insurance
Small enterprises export credit
insurance
Enterprise annuity pooled
insurance
Short-term export credit
insurance
Short-term domestic trade
credit insurance
Domestic credit insurance
Coverage(¥）
to be
determined by
size and value
Coverage(¥):
0.05-0.1
million

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Comparing insurance brands’ strategies in China
The main model is to tailor the insurance package according to each company’s needs (personalized package) including
different coverage and products.
16
Strategy
Brand
Sales model & channels Insurance products Pricing and coverage models
PingAn
(中国平安)
Model: personalized/bespoke
package
Channels:
1.Official website order
2. Phone call order
3. Traditional insurance agent
1. Medical insurance
2. Corporate group comprehensive accident
insurance
3. Employer liability insurance
4. Small-business insurance
5. Carrier liability insurance
6. Trade credit insurance, others
Due to the wide range of products, some
are priced and insured at a fixed amount,
others are flexible.
PICC
(中国人保)
Model: standard package with
optional add-ons
Channels:
1. Online order (official website,
WeChat mini-app)
2. Phone-call order
1. Insurance solutions for SMEs
2. Insurance solutions for restaurants
Insurance price and coverage range are
fixed and are listed.
CPIC
(太平洋保险)
Model: personalized sale
Channels:
1. Phone call order
1. Breast cancer insurance
2. Export credit insurance for small
companies
3. Enterprise annuity insurance
4. Short-term export credit insurance
5. Short-term domestic trade credit
insurance
6. Credit insurance for domestic trade
With the exception of breast cancer
insurance, all the other packages' price
and coverage range are flexible, which
should be tailored to each company's
specific situation.

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4
Focus on insurance brokers

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Insurance brokers’ unique selling point is to offer richer services and solutions
18
Insurance brokers accept the entrustment of individual
consumers or other companies. They represent the interests of
consumers.
Insurance brokers analyze the advantages and disadvantages,
and applicability of insurance products, then provide clients with
insurance solutions that match their needs.
Selling products from multiple insurance companies.
Insurance brokers Professional insurance agencies
Insurance agencies sell insurance products for insurance
companies. They represent the interests of insurance companies.
According to consumer demands, insurance agencies
recommend insurance products among the products offered
by fixed insurance companies.
Only sell insurance products from contracting companies.
An insurance broker is an independent professional advisor providing intermediary service in risk and insurance. Based on
applicant’s interests, it serves to help entering into an insurance contract between applicant and insurer.
The most important insurance types for brokers are personal insurance, such as life insurance, health insurance and
supplementary insurance.

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19
“The duty of an insurance broker is to provide advice on
purchasing decisions with regards to insurance coverage.
Dealing with clients and insurance companies require to
have excellent communication skills and most of all, to be
an expert in insurance and risk management.”

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The insurance brokers sector growth boomed in 2018
20
38.0
42.1 43.0
50.5
55.9
69.2
74.1
102.8
2011 2012 2013 2014 2015 2016 2017 2018
Total premium income of insurance brokers in China
(billion RMB)
Source: China securities, China insurance yearbook, designed by daxue consulting
In recent years, the revenue of China’s insurance brokers is increasing. Personal insurance fees are the main part of the income
of insurance brokers. In 2018, the premium income increased by 38.7% as accident and health-related insurance had a sharp
growth.

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Insurance brokers are facing fierce competition
21
National
insurance agency
9%
Regional
insurance agency
59%
Insurance
brokers
19%
Insurance
assessment
company
13%
Distribution of insurance intermediaries in China
by types of institutions
(2018)
Source: China securities, PwC, designed by daxue consulting
Although there are more insurance brokers in China’s insurance market, they are still much less numerous than insurance
agencies. The leading insurance companies in China are increasingly selling products through their own sales teams or
professional insurance agencies. Insurance brokers have to face the competition from both insurance companies’ sales team
and professional agents.
In western countries such as the United States, insurance brokers can plan insurance policies according to customers' needs,
then negotiate with insurance companies. But in China, brokers can only sell insurance offered by insurance companies.
416
434
438
445 445
483
487
499 496
2011 2012 2013 2014 2015 2016 2017 2018 2019
Number of insurance brokers in China

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22
“Few insurance brokers are specialized in SME
insurance. The fiercest competition is with Chinese
brokers selling mass market insurance packages such as
accident insurance and life insurance online.”

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Regulations for insurance brokers (1/2)
23
The institutional reform plan of
the State Council announced the
merge of China Insurance
Regulatory Commission (CIRC)
and China Banking Regulatory
Commission (CBRC), which
introduced the new single-
headed commission-China
Banking and Insurance Regulatory
Commission (CBIRC).
Mar 13, 2018
The merge of CIRC and
CBRC
May 19, 2020
CBIRC issued the Notice on
Strengthening the Management
of Insurance Intermediary
Institutions Practitioners, which
makes 9 requests with focuses on
stricter staff management and
higher quality of practitioners.
May 28, 2020
More rigid regulation of the
insurance brokerage market
The 2020 insurance intermediary
market chaos rectification plan
released by CBIRC revealed the
ambition to better regulate the
insurance intermediary market.
Focuses for this year were also
pointed out, including the
regulation of fictitious business
fees, misappropriation and
retention of premiums, and
compilation of false data.
Higher standards for
insurance brokerage
practitioners
These regulations made insurance brokers enhance practitioner ability to provide better quality products and services. Also made
them be more cautious about their behavior.

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Regulations for insurance brokers (2/2)
24
Aug 18, 2020
Higher entry level to the
insurance brokerage market
Sep 19, 2020
Higher requirements for
risk response capabilities
Sep 28, 2020
More comprehensive
internet insurance
regulation
According to the Implementation
Measures for the Administrative
License and Filing of Insurance
Intermediaries (Draft for
Solicitation of Comments)
released by CBIRC, the application
of insurance brokerage must
meet 11 conditions, among which
the minimum registered capital of
regional insurance brokers
increases to 20 million rmb, which
is double that of last year.
CBIRC released the Administrative
Measures for Financial Services of
Banking and Insurance Institutions
in Response to Emergencies,
which puts forward a higher
standard for the risk response
abilities of insurance institutions.
The order includes 38 articles
which clarify the requirments on
risk response planing, risk drill
and other risk response
management measures.
CBIRC released the Internet
Insurance Business Supervision
Measures (Draft for Solicitation of
Comments), which further
regulates the internet insurance
market. Starting from the
definition of internet insurance
business, the regulation also
stipulates online-and-offline
applicable regulatory standards,
internet insurance marketing and
after-sales service requirements,
and specifies the licensing
principle of internet insurance.
These regulations built a higher entry level for insurance brokers and eased insurance market competition. Insurance brokers had to
strengthen risk response abilities to ensure a smoother financial market.

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Insurance broker in China
Entrepreneurship is associated with risks, let’s turn risks into gains
26
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

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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
27
CONTACT US
010-6500 3217
www.asian-risks.com
info@asian-risks.com
And more
Property All
Risks
Business
Interruption
Employers
Liability
High-end
Medical
Insurance
Public
Liability

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Who we are
29
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

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