INTERVIEW: Allianz China Life taps into commercial health insurance market
Shanghai. April 26. INTERFAX-CHINA - Allianz China Life Insurance Co. Ltd. (Allianz China Life), a life insurance joint venture (JV) between German financial services conglomerate Allianz SE and Chinese investment firm CITIC Trust Co. Ltd., has been increasing its focus on China's commercial health insurance market, which shows great growth potential, Wilf Blackburn, the company's CEO, told Interfax in a recent interview.
Founded in 1999 in Shanghai, Allianz China Life was the first European insurance JV in China. The company offers a comprehensive range of insurance products and services, covering retirement, investment, education, health and accidents.
In December 2009, Allianz China Life launched its first high-end health insurance package, named Sheng Shi Zun Xiang. The program gives policy holders one-time payouts to cover the treatment of 32 critical illnesses, plus an additional allowance equal to 10 percent of the minimum payment in the event of an accident, known as the guaranteed sum assured. It also covers an annual health check-up for the policy holder and one of their family members.
"The package is the first in China's health insurance market to offer a lifetime annual recovery allowance for critical illnesses," said Blackburn.
In response to increasing medical costs in China, Allianz China Life launched Yi Sheng You Xiang in 2010, under which the guaranteed sum assured for critical illnesses grows three percent year-on-year. "This mainly targets China's middle class consumers, as health care protection is becoming one of their key concerns at present," he said.
The Sheng Shi Zun Xiang and Yi Sheng You Xiang programs together accounted for nearly a quarter of Allianz China Life's sales in 2010, and that figure grew to 34 per cent in the first quarter of this year. According to Blackburn, the company will upgrade the two products this year to include more coverage options to meet the growing needs of their costumers.
China's commercial health insurance market is growing fast. Figures from the China Insurance Regulatory Commission (CIRC) show market value grew by a factor of more than 20 between 1998 and 2009, from RMB 2.5 billion ($382.85 million) to RMB 57.3 billion ($8.77 billion). Health insurance sales revenue, however, accounted for only 6.95 percent of China's total life insurance market in 2009, much lower than the 30 percent typical in developed economies.
"China's health care reform is an important growth driver for commercial health insurance business," Blackburn said.
The reform aims to extend basic medical insurance coverage to all China residents by 2020. But this will not meet all health care needs, and many high-end consumers will ask for more than basic coverage.
China's health care reform guidelines therefore encourage insurance companies to develop commercial health insurance products, and for Chinese firms and individuals to take part in commercial health insurance programs.
Despite the growth opportunities, there remain challenges to marketing commercial health insurance programs in China, said Blackburn.
First, many of China's consumers remain unwilling to purchase non-refundable protection products. According to the executive, insurance companies can add value to their services by providing customers with health management services as part of their health insurance products - for example by covering the costs of health check centers, health food outlets, gyms and weight loss programs.
In addition, insurance firms continue to face difficulty in accessing patient data, as many hospitals in China lack proper information systems or are unwilling to share data with outside parties. This remains a major challenge for the sector.
Insurance companies are encouraged to work with hospitals to develop health information systems, according to Blackburn. "Such systems not only facilitate data and payment transfer in hospitals, but also allow insurance companies access to patient data which can aid in the development of health insurance products," he said.
-KZ