News Non-Life09 May 2018

China:Call to tread carefully around gimmicky insurance products

09 May 2018

The boom in niche or gimmicky insurance products offered online in China has some industry experts worried, reports Xinhua News Agency.

Adventurous eaters can buy a policy for CNY9 (US$1.40) that pays out up to CNY1,000 a year for medical expenses if the policyholder gets acute food-related gastroenteritis.

Another policy offers a payout of up to CNY2,000 for accidental injuries that occur within a period of up to three months, with policies available for less than CNY1.

Other products offer returns to pay vet bills for sick pets, broken phone screens, and cosmetic surgery accidents.

Around 12.5 billion online insurance products were bought in China last year, twice the number of sales made in 2016. Among which accident insurance sales experienced a five-fold increase, with the number of policies sold rising to 1.6 billion. And liability insurance products had a more than four-fold increase, with over one billion policies sold.

The boom in public interest in insurance products has led various Chinese Internet giants to join in the competition for customers, including Alibaba, Tencent, Baidu, and JD.com.

According to Chen Jin, CEO of the online insurer ZhongAn Insurance, the spread of the Internet is leading to positive change in the insurance industry, bringing growing opportunities for sales of personalised insurance products.

However, some experts are calling for consumers to be cautious when purchasing online insurance products, warning that they may be buying into illegal fund-raising schemes.

In early 2017, the CIRC (now the CBIRC) issued the guidelines for the development of insurance products, listing products insurance companies shall not develop, which include gimmick products that speculate in concept and have no substantive content or meaning.

Xia Xuemin, a professor from Zhejiang University, suggests establishing an official blacklist and credit system for online insurance providers.

 

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