Life insurance industry remains muted amids pandemic challenges in China
Most life insurers reported negative growths in April.
Though improving, China’s life insurance industry continues to remain muted amidst challenges brought by the resurgence of COVID-19 in the country, according to a market report by UOB Kay Hian.
As of April, six of the top life insurers in China recorded a growth in life insurance premiums of 0.8% compared to 0.4% in March. PICC Life was the only insurer of the six that registered a double-digit growth in premiums in April at 22.1% YoY. It is followed by China Pacific Insurance at 4% YoY, and New China Life 3.8% YoY.
Slowdown cause
UOB Kay Hian identified two factors that caused the slowdown in premium income growth in life.
First was a decline in consumers’ propensity to consume, which resulted in a decrease in demand and made life insurance business expansion more challenging.
According to the annual reports of insurance companies (Ping An, CPIC Life, and CPIC P&C) for 2021, Shanghai contributed 5.8%, 3.4%, and 7.7% of the total original premium income. Thus, the decline in Apr 22 premiums was partly due to the lockdown in Shanghai.
The second was agency reform.
“As a result of China Life’s and Ping An's stringent channel reforms, their monthly life insurance premiums have declined. Looking ahead, the recurrence of the pandemic is expected to continue impacting the major cities, in addition to the annual decline of agents. China insurance companies are likely to face a challenging second quarter,” UOB Kay Hian said.
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