State Council urges more personal health insurance

China's Cabinet stresses need to address increasing demand for senior care as nation ages

The State Council, China's Cabinet, has outlined a number of measures to bolster the growth of the personal insurance sector, while pledging to accelerate the development of commercial health insurance and encourage insurers to devise more products for seniors.

At an executive meeting on Wednesday, the cabinet stressed the need to improve financial services and unleash the growth potential of the personal insurance industry to address the growing demand for healthcare, senior care and social security.

In a statement, the State Council said China must move forward with the reform and opening-up of the sector, which would provide a range of high-caliber personal insurance products.

More products targeting major diseases must be developed, and they must complement basic health insurance to widen the safety net for urban and rural residents, it added.

The State Council pledged to offer insurers incentives to develop products to suit seniors' demands and financial resources, and to incorporate treatment costs that lie outside the basic medical insurance in their coverage.

"With China's huge market, there is still immense potential for insurance sector growth," Premier Li Keqiang said. He noted that people age 60 or older face many restrictions when purchasing commercial health insurance, which leaves them with limited choices.

Liu Zining, a researcher with the School of Insurance at the Central University of Finance and Economics in Beijing, said the measures will help the development of a multitiered social security system appropriate for China's increasingly aging society.

"With an insurance sector that offers a wider range of professional services and more diverse products, the government, businesses and individuals can respond jointly to the challenges presented by the country's aging society," she said.

Data from the National Bureau of Statistics show that by the end of last year, China was home to 254 million people age 60 or older, accounting for 18 percent of the population.

Moreover, that number could rise to 434 million, accounting for about 30 percent of the population, by 2040, the NBS said.

Liu underlined the significance of developing more commercial health insurance for seniors, which "will alleviate their financial pressures when faced with health risks and reduce the burden on society and families of caring for the elderly".

Zhang Qingfeng, CEO of Beijing Aixuan Info Technology, an insurtech startup that focuses on specific groups in the population, including seniors, said, "The State Council meeting reemphasized the need to encourage the active participation of the commercial insurance sector to cope with China's aging society and make the sector an important pillar for the country's pension system."

He noted that a key policy objective is to help more seniors obtain commercial health insurance, provision of which could be technologically demanding for insurers as the level of risk is higher among older people.

"In addition to reimbursing medical costs, it is important for insurers to develop products that emphasize health management and accompanying services," Zhang said.

With China scrapping caps on foreign ownership of personal insurers from this year, the State Council has underlined the importance of opening-up and international cooperation to boost the sector's growth.

At the meeting, the State Council's members agreed to develop the commercial endowment insurance sector so it can become a pillar of the nation's social insurance system, saying its role in the social security system will be strengthened as a result.

Insurers will be encouraged to offer elderly care services, including in communities for seniors, and the sector will be allowed to take part in pilot long-term care insurance projects, the State Council said.

Zhou Xing, China insurance leader with the accountancy firm PwC, said the level of personal insurance coverage in China is still far below that seen in developed countries.

However, improving coverage will bolster consumer confidence and help the country's efforts to foster a new development pattern.

"The rapid expansion of China's middle-income group has resulted in surging demand for commercial health insurance," she said.

"We believe that the measures announced at the State Council's executive meeting will encourage the insurance sector to devote more energy to developing products related to health insurance."

The State Council's decision to include personal insurance, including those in the form of annuities, as one of the pillars of China's social security system is in keeping with international practice, she added.

However, to further boost the growth of annuities and other forms of life insurance, she highlighted the need for the government to offer preferential tax policies for individuals as a way of encouraging people to save for the future.