Private health insurance in China forecast to surge fivefold
The private health insurance market in China is expected to surge fivefold to Rmb1.1 trillion by 2020 ($167 billion) from Rmb 241 billion in 2015, according to a report by The Boston Consulting Group (BCG) and Munich Re.
The report suggests that middle-class and wealthy Chinese are looking for an alternative to the public insurance system, and reviews the changing consumer expectations and government efforts to encourage more private health care options that are driving this substantial growth.
The report expected the fastest growth in reimbursement policies, as they are more expensive but more flexible than critical-illness policies than many people living in Chin have today.
Ying Luo, co-author of the report and a partner in BCG’s Beijing office, said: "Private reimbursement insurance makes tremendous sense in China. There isn’t yet a mass market for it because of the cost. But there is a lot of interest and we expect to see many new products in the next few years.”
A survey of Chinese consumers highlighted an opportunity for carriers, with the most likely purchaser of reimbursement insurance – aged 35 to 55 years, married with children and a minimum income of Rmb200,000 – expected to grow to over 40 million Chinese people by 2020.
John Wong, head of BCG's Greater China Health Care practice, added: “Today, private reimbursement policies are generally sold through group insurance. Purchases by individuals are still rare, and pure reimbursement players in China simply haven't been able to make money due to the small size of the market. This is set to change.”
The report highlighted six key requirement for insurers looking to compete in the reimbursement market in China, which represents 36 percent of the Rmb1.1 trillion private insurance market in 2020.
Doris Hoepke, member of Munich Re's board of management, responsible for Munich Health, said: “To participate in the reimbursement market, organizations need to have a clear understanding of target customers and their needs, which should be reflected in innovative products tailored for these segments. Other requirements are an efficient claims and operations management, which guarantees customer satisfaction while keeping internal costs low, attractive and user-friendly sales channels, and an approved network of hospitals and health service providers.”
Bill Bossany, deputy chief executive of Munich Re, Beijing (Health Branch), added: “Insurance companies need to understand the characteristics and preferences of different customer segments: the amount of money they are willing to spend on reimbursement insurance and what they expect to receive in return.”
