Shanghai Finance


China's commercial health insurance market poised to top 1 trillion yuan by 2020

July 31,2018


China’s commercial health insurance market is still in its infancy and is projected to exceed 1 trillion yuan (US$150 billion) by 2020, according to a recent report released by the Insurance Association of China.

The sector saw an average of 38 percent in compound growth of premium income from 2012 to 2017 and became an important driver for the development of the country’s commercial health insurance business.

With an aging population and the rising demand for a healthy life, the association predicted that the commercial health insurance market will continue to show good momentum and top 1 trillion yuan by 2020.

Currently, the world’s second largest economy has 149 companies operating health insurance business, including six professional health insurers, 75 life and annuity insurance companies and 68 property and casualty insurance firms, with a total of 4,283 products being sold.

Industry data shows that 2016 recorded 404 billion yuan of the commercial health insurance premiums, up nearly five times in six years.

However, due to tightened supervision starting from two years ago, the market’s growth rate plunged by 59.12 percentage points year on year to stand at 8.58 percent in 2017, with 438.95 billion yuan of original insurance premium income.

The report noted that compared with other developed markets, China’s commercial health insurance is still in the primary stage of development and plays a limited role in satisfying people’s medical and health needs.

For example, per capita health expenditure covered by commercial health insurance is less than 6 percent in China, while the number is over 35 percent in the United States and more than 10 percent in France and Canada.

Besides, the payout ratio of private health insurance has shown a continuous downward trend from 2013 and remained at a low level in contrast with countries like the US.

Plagued by a lack of cooperation mechanisms for sharing risks and information as well as balancing interests with major medical service providers like public hospitals, China’s health insurance companies have limited ability to manage medical expenses and are not capable of offering sufficient health management services, the report said.

Commercial health insurance features a high degree of specialization and involves a wide range of fields. As such, parties concerned like hospitals, government institutions in charge of medical insurance and insurance companies should work together to boost the seamless connection of health information.

As the payer of medical services, insurers can also try to integrate resources by setting up or taking control of medical institutions and drug distribution institutions and providing quality managed medical services, according to the report.

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