China life insurance to reach $665.7b

THAILAND INSURERS OFFER VACCINE ALLERGY INSURANCE

THAILAND

Insurers will need to stay abreast of vaccine-related developments

Vaccine allergy insurance products launched by Thailand insurers address an important financial protection need in the Southeast Asian country, and presents a good opportunity for business growth but insurers should be cautious of risks involved in new products, ratings firm AM Best said.

In a commentary by AM Best, “Thailand Insurers Offer Innovative Vaccine Allergy Product, But Underwriting Risks Remain,” the ratings firm said that with new variants having emerged, coupled with pockets of vaccine hesitancy, the recent introduction of vaccine allergy insurance cover provides a growth opportunity for Thailand’s life and non-life insurance segments, which were supported by robust health insurance demand in 2020.

Effective risk mitigation

AM Best emphasised the importance of insurers remaining on top of their risk exposure, given the uncertainty surrounding loss exposure. The insurer added that effective risk mitigation will need to be supported by prudent underwriting risk management, including appropriate use of reinsurance, effective pricing strategies, clearly defined policy coverages, and prudent limits that are aligned to the companies’ risk appetites.

“Insurers will need to stay abreast of vaccine-related developments related to frequency and severity trends of side effects domestically and globally in order to proactively manage and limit their risk exposure should adverse trends develop. COVID-19 vaccine profiles vary amongst manufacturers, and the World Health Organization has noted a lack of comprehensive quality data regarding the serious adverse effects of particular vaccines. Positive or negative developments in these areas could bear material implications for Thailand insurers offering vaccine allergy insurance cover,” AM Best said.

“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.

Pension insurance

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.

The private pension 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.

China’s ageing population and rising life expectancy created a demand for health insurance products

China life insurance to reach $665.7b in 2025

CHINA

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 the life insurance industry in China.

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.

Demand for life insurance benefitted from the growing middle-income population

There is a growing demand for protection-type life insurance