Changing the Face of Insurance in China
The insurance business in China has undergone big changes in the last 40 years, paralleling the country’s remarkable rise in wealth and living standards. Now the industry is in the midst of another transformation: shifting from a business perceived as cold and transactional to one seen as warmer, offering not only financial products but also life-enhancing services.
Ping An, a leading insurance and financial services company in China, is spearheading this transition in response to changing consumer attitudes about insurance.
As Ping An sees it, today’s customers need more than just insurance; they need professional and thoughtful services in healthcare, elder care and daily life as well. “Under this modern model, insurance is not just about financial security; it should also be a provider of heartwarming service,” Ma Mingzhe, chairman of Ping An Group, said at the company’s shareholders meeting last year.
As China’s social security system improved, its enhanced support services dampened some of the appeal of basic insurance. Traditional insurance products were solely about providing financial protection. That’s still important, but as consumers become more financially secure, they’re seeking out higher-quality, more comprehensive medical and preventative care. People buy commercial insurance to access that care.
Ping An’s vision of “heartwarming insurance” combining insurance with healthcare and elder care, is part of a three-year reform plan that started in 2020. The company’s plan comes amid large-scale reform in China’s insurance sector. Insurance agents have traditionally been the key distribution channel in China, but the current labor shortage makes recruiting sales agents difficult. China’s labor force dropped from a peak of 910 million in 2015 to 890 million in 2020 while wages are going up. Rather than hire more agents, Ping An is focusing on improving the quality of its existing pool of agents by raising salaries, improving retention rates, providing more training and increasing productivity. The results from pilot projects have been promising, with both premiums and retention rates up.
China’s life insurance market still has plenty of growth potential. Disposable income per capita has grown by 7.1% CAGR between 2016 and 2020 and is expected to grow more. Medical expenditure is also only a third of that of other developed Asian countries, despite having grown at a rate of 6.2% CAGR in the last five years. Only 2.4% of Chinese have life insurance, below the world average of 3.3%. Among customers ages 26 to 45, less than 40% have bought protection insurance.
Meanwhile, the insurance industry is facing a push to extend its range of products. In 2020, 80% of new insurance offerings were for critical illness. Ping An believes its integrated insurance and healthcare model has a first-mover advantage because it leverages the company’s already broad range of products and services. In February 2021, the company launched Ping An Zhen Xiang RUN, which translates roughly as “enjoy the good life,” a new service that gives customers access to a wide range of services, including health and wellness, chronic disease management, critical illness management and elder care. The program works with 38,000 doctors, most from top hospitals, including the 100 most respected hospitals in China.
Dedicated family doctors create customized health profiles for customers in the program and provide continuous health management for preventative care. The plan has different levels; some include health management incentives that encourage customers to adopt healthy habits. Others include more in-person medical and health management visits. Offering this level of preventative healthcare helps doctors detect and treat diseases earlier, ultimately lowering medical costs.
A New Standard of Care
Another foray into what Ping An calls “caring finance” combines financial services, healthcare and a new form of innovative elder care. The company launched Ping An Zhen Yi Nian, an elder care brand, in spring of last year. Zhen Yi Nian, which means “nourish your old age,” combines insurance with access to state-of-the-art elder care communities. The company’s attention to elder care comes as China’s population ages. It’s estimated that 3% of Chinese seniors will spend their later years in a nursing home.
Ping An Zhen Yi Nian Brand considers elderly care in a holistic and high-end way.
Through Zhen Yi Nian, customers will have access to specially designed healthcare solutions. One example is an international rehabilitation medical team led by the National Academy of Medicine in the U.S. that will design rehabilitation programs for clients. The brand will also offer access to concierge services catering to everything from wealth management to personal services such as travel planning.
“Ping An aims for Ping An Zhen Yi Nian to set a new standard for China’s elder care industry,” says Jessica Tan, co-CEO of Ping An Group. “As a world-leading service provider, it will deliver a high-quality retirement experience, filled with happiness, security and dignity, for the elderly in China.”
To be sure, elder care not only serves a growing need but also complements Ping An’s insurance business. Buyers of any Ping An Zhen Yi Nian products can use their saved pension funds to live in a smart community or nursing home with access to comprehensive medical and nursing services that are linked to their insurance policies.
As an early mover, Ping An’s new model has strengthened the company’s market position, while setting the standard for what customers are now looking for—reliable, connected insurance and healthcare services supported by caring financial advice.
 Ping An Group 2021 Interim Results