China drives cheaper health insurance products to fight viruses

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HONG KONG / BEIJING (Reuters) – China is pressing insurers to work on cheaper medical coverage related to the coronavirus and assuring them of quick approval for these new products, people with knowledge of the matter said.
The measure will mark a change in the Chinese insurance market, where most of the existing products are essentially investment schemes and pure medical care coverage accounts for only one fifth of the total life insurance premium.

In the last week, China Life, China Pacific Insurance, Ping An Insurance Group and Zhong An Online P&C Insurance Co, among others, have included coverage for the virus in their existing health insurance products, according to their websites.
At least half a dozen more are in the process of requesting approval for products with coronavirus coverage in the coming weeks, said the people, who refused to be named as they were not authorized to speak with the media.

The fight comes when the Chinese province of Hubei, at the epicenter of the outbreak, reported a record increase in the death toll on Thursday and world health experts warned that the epidemic could get worse long before it is controlled.

Last week, the China Banking and Insurance Regulator (CBIRC) adjusted the actuary rules for health, accident and life insurance, as well as annuity insurance, which will help reduce premiums for such insurance by 3 % to 5%.
The sources said that lower premiums and the search for cheaper basic medical coverage were largely driven by the need to deal with treatment for those who can become infected by the coronavirus.
CBIRC did not respond to the request for comments from Reuters.

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Despite a weak government health system, private health insurance has taken a long time to take off in China, as insurers mainly dealt with the demand for insurance products similar to high-margin investments.
The high cost of coverage for critical illness products, which generally exclude epidemic insurance, has put them out of the reach of many, industry officials said.
However, Beijing has been pressuring private insurance companies to expand their product coverage to relieve pressure on the health system and as part of a broader repression of the sale of investment products linked to banking in the shade by insurers.

As a result, health insurance in 2019 accounted for 23% of life premiums in China, compared to only 8% in 2003, according to Fitch Ratings. In the United States, this figure represents approximately 30% of life premiums.

That participation in China is expected to increase significantly in the near future, as people are rushing to buy coverage for the treatment of the new virus, and a large number are seeking admissions in private hospitals, people said.

The regulator has assured insurers of approvals to launch those products in a few days, they said, compared to the usual two-week or longer period for insurance products linked to the investment.

Premium charges for low-severity medical insurance, which will generally include virus treatment coverage, could be between 15% and 30% cheaper than critical illness products, industry officials said.

The demand for products with basic medical care coverage, including the coronavirus, is already skyrocketing.

"There is no doubt that awareness about insurance will increase significantly in the near future," said Sam Radwan, president of the ENHANCE International consultancy, which advises major insurers in China.

"Customers will better understand the need to buy these products compared to the past when my customers had difficulty convincing them to buy these products and the net result was that the acquisition costs were very high."

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