China life insurance premiums to reach $665.7b in 2025
Industry stakeholders push to develop the pension insurance market in China.
The life insurance industry in China is projected to grow from CN¥3.2t ($459 b) in 2020 to CN¥4.5t ($665.7b) in 2025 in terms of direct written premiums, according to data and analytics firm GlobalData.
China’s life insurance industry is forecasted to grow 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, China’s life insurance industry is dominated by traditional life insurance products such as whole life insurance which accounted for around 75% of the life insurance DWP in 2020.
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, given the growing retired population, Mitra also said that there is a conscientious push by industry stakeholders to develop the pension insurance market in China. Presently, the market for private pensions is 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, which saw the establishment of a new national pension company last September.
The new company 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.