China life insurance premiums to reach $665.7b in 2025
Thanks to the growing demand for protection-type life insurance products.
The life insurance industry in China is projected to grow, from $459b (CN¥3.2t) in 2020 to $665.7b (CN¥4.5t) in 2025, in terms of direct written premiums, according to the data and analytics firm, GlobalData.
It is forecasted to increase at a compound annual growth rate (CAGR) of 7.4% over 2020–2025, supported by demographic trends, development of the private pension sector, and growing demand for protection-type life insurance products such as long-term care insurance and health insurance.
According to Deblina Mitra, senior insurance analyst at GlobalData, traditional life insurance products, such as whole life insurance that accounted for around 75% of the life insurance direct written premiums (DWP) in 2020, dominated China’s life insurance industry.
Mitra noted that the demand for whole life insurance benefitted from the growing middle-income population and rising disposable income.
Government statistics showed that per capita disposable income in China grew at a CAGR of 7.9% from 2015 to 2020.
“Health insurance sold by life insurance companies accounted for 22.3% of overall life insurance DWP in 2020. China’s ageing population and rising life expectancy created a demand for protection and personal accident and health insurance products to cover morbidity risks. At the same time, rising medical expenses coupled with tax exemption supported the uptake of health insurance products,” Mitra said.
Meanwhile, there is a conscientious push by industry stakeholders to develop the pension insurance market in China, given the growing retired population. Presently, private pensions are negligible in China due to a lack of product development and the presence of a large informal sector.
The push for developing the private pension sector started with 17 financial firms, including the Insurance Association of China. For one, a new national pension company was established last September. It will provide commercial pension and health insurance in collaboration with life insurance companies.
This development will allow life insurers to gain substantial business from China’s overall $1.2t pension sector.
“China’s short-term economic outlook is exposed to the ongoing government’s reforms on the private sector. Recent fallout in the property sector and power crisis is also expected to impact economic growth resulting in a slowdown in life insurance growth in 2021. Recovery is expected from 2022 once the full-scale impact of these structural changes is mitigated,” Mitra concluded.