China In Cheaper Health Insurance Products to Fight Virus
February 13, 2020 | Thursday
According to some people with knowledge about the matter, China is pushing insurers to work on cheaper medical cover linked to the coronavirus. And it is guaranteeing them of fast-track approval for these new products. The move will make a shift in the Chinese insurance market where the bulk of existing products are typically investment schemes. Pure healthcare accounts are only about a fifth of the overall life insurance premium. In the previous week, China Life, China Pacific Insurance, Ping An Insurance Group, and Zhong An Online P&C Insurance Co, have added coverage for the virus in their existing medical insurance products. Then, in the coming weeks, there are at least half a dozen more in the process of requesting approval for products with coronavirus coverage. And this was from some people who want to remain anonymous as they were not authorized to speak to the media. At the same time, the Chinese province of Hubei, the epicenter of the outbreak, reported a record increase in the death toll on Thursday. Also, global health experts gave a warning about the epidemic growing far worse before becoming under control. Furthermore, China's Banking and Insurance Regulator (CBIRC) last week edited actuary rules for healthcare, accident, and life insurance as well as annuity insurance, helping lower premiums for such insurance by 3% to 5%. The sources stated that the need to deal with treatment for people who might get infected by the virus prompted the lower premiums and boost for cheaper, basic medical cover.
Even with a weak government healthcare system, private health insurance has been slow to take off in China. And this was due to insurers mostly catered to demand high-margin investment-like insurance products. Usually, the high cost of coverage for critical illness products excludes insurance for epidemics. And it has to set them out of reach of many. But Beijing has been encouraging private insurance firms to expand their product coverage to ease pressure on the healthcare system. Also, they want it to be a part of a broader crackdown on the sale of shadow banking-linked investment products by insurers. Thus, healthcare insurance in 2019 accounted for 23% of life premiums in China. And this is up from only 8% in 2003. In the United States, this figure is around 30% of the life premiums. In addition to that, they expect that chare in China will improve significantly in the near future as individuals rush to purchase coverage for treatment of the new virus with a large number looking for admissions to private hospitals. The regulator has guaranteed insurers of approvals to launch the products within a few days. This is faster compared to the usual timeline of two weeks or more for investment-linked insurance products.
Loving what you've read now and want to have more news similar to this? Send your contact details here. Need to advertise your business? Connect with us now, and we'll be glad to help.