(Yicai Global) Nov. 16 -- In the first three quarters of this year, the direct premium income of health insurance business grew only 4.45 percent to CNY358.3 trillion (USD54 trillion), a decline of 82.31 percentage points compared with 86.77 percent growth in the same period of last year, the Securities Daily reported, citing data released by the China Insurance Regulatory Commission (CIRC), the country's top insurance regulator.
In 2016, health insurance growth has been the fastest growing business among the four categories of insurance business, namely, property insurance, life insurance, health insurance and casualty insurance. But since this year, health insurance premiums have kept falling. In the first nine months of 2017, it has recorded the slowest business growth, reversing its ability as the fastest growing business in the same period of last year.
As defined by the CIRC, health insurance is a type of insurance coverage under which the insurer will pay insurance benefit when the insured makes health claims due to health reasons or medical treatment, which mainly includes medical insurance, disease insurance, disability insurance, long-term care insurance and medical accident insurance.
With the restriction imposed by the CIRC on the scale of short-term health insurance premiums, some decline in the scale of health insurance premiums is quite normal, which is conducive to returning to protection function and development of the insurance industry. At present, there is no much room for innovation in critical illness insurance, but in medical insurance, insurers can still have great room for innovation, the CEO of a life insurance company said.
Health insurance premiums showed rapid growth in recent years. From 2012 to 2016, the growth rate reached over 20 percent, 30 percent, 40 percent, 50 percent and 60 percent, respectively. So, why has health insurance growth nosedived this year?
The rapid decline in health insurance premiums is down to health insurance companies and other life insurers reducing the short-term care insurance, including universal care insurance, which received substantial demand in the past.
Data show that in 2016, two types of care insurance premiums of two health insurers accounted for 30 percent of the total industry. With the CIRC's strengthening regulations on short-term products since last year to return to insurance function, health insurers have reduced this type of insurance, which led to premiums plummeting.
In recent years, some commercial health insurers have been keen to develop short-term care insurance, mainly because health insurers cannot carry out life insurance and annuity products business, and can only engage in health insurance, insiders said. As care insurance is more of a savings product in almost four categories of health insurance, it is more suitable to be designed for short and medium duration products.
The development of commercial insurance offers the most favorable factors, says Zhu Jinyuan, head of insurance association of China. However, the insurance industry cannot make breakthrough and participate in this big market. Insurance companies should find inspiration from the experience of developed markets, and make breakthroughs in product development and service innovation in the future, Zhu suggests.
In October 2016, the State Council, China's cabinet, issued the "Healthy China 2030 Planning Outline," which prompted a series of discussions among the insurers. In 2015, China's health service output value was about CNY4 trillion, of which health insurance service related industry was CNY175 billion, accounting for only 4 percent. The "Healthy China 2030 Planning Outline" envisions the health service industry scale will exceed CNY8 trillion by 2020, and will reach CNY16 trillion by 2030, so commercial health insurance will have a large scope for development.