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Aug 2022

Serving the underserved: Health insurance for the silver generation

Source: Asia Insurance Review | Mar 2022

Vivian WeiChina has been seeing a sharp rise in its senior citizens over the past decade, confirming the country’s rapidly ageing pattern. According to its national census data released in 2021, the total population of senior citizens living on mainland China aged 60 and above has reached over 260m, out of which over 72% are aged 65 and above. The size of China’s silver generation accounts for 18.7% of the total population, which is up nearly 5.5 percentage points since the previous national census was undertaken in 2010, says Pacific Life Re’s Ms Vivian Wei.
As outlined in China’s 14th Five-Year Plan period (2021-2025), the country is forecasted to grow the size of its silver generation by 53m people over that period, averaging to more than 10m annually.
Growing insurance demands of the silver generation
With the economic growth in China over the past decades, the public awareness of risks and the purchasing power have been steadily increasing. The silver generation is now showing a greater demand for insurance products like never before.
According to the China Banking and Insurance Regulatory Commission (CBIRC), about 107m senior citizens aged 60 and above are covered with different types of commercial insurance (including both savings-type and protection-type products), with the penetration rate standing at 41%. The accumulated insurance premium income generated from people aged 60 and above reached CNY 1.4tn ($221bn) as reflected in the 13th Five-Year Plan period (2016-2020). Both the number of policies and the amount of premium income showed an increasing trend year by year.
Meanwhile, the government has recognised the importance of commercial insurance as an effective means for senior citizens to maintain and raise their quality of life. The administration will utilise the supplementary role of commercial insurance in elderly care, step up the development of commercial health insurance products suitable for senior citizens and enrich the commercial insurance supply. Backed by the strong support from the government, the regulator hopes to encourage insurers to develop more commercial insurance products for the silver generation to satisfy their growing insurance demands in an ageing society.
Gaps in the insurance product supply
Among the existing products offered by commercial insurers, more than 1,000 products are available for purchase by people aged 60 and above, ranging from life insurance, health insurance, accident insurance and other types of coverages. However, problems such as insufficient supply and low level of protection still exist. For example, most of these products have a maximum entry age of 65 and the maximum sum assured is usually set at a very low amount.
In addition, if we were to take a closer look at some of these products, most of them are not specially designed for the silver generation. Instead, some insurers merely relaxed the restrictions on the entry age of the insurance products that are catered for younger customers. However, the senior group can hardly meet the underwriting threshold for majority of products which have been structured with the younger group in mind.
Furthermore, the supply of commercial health insurance is even more insufficient. There are barely any health insurance products exclusive to the silver generation with differentiated product designs to cover their special needs on chronic diseases, medical, and nursing care. Even with more than 1,000 products available for people aged 60 and above, there are still many more who are unable to find the right products that meet their needs.
Bridging the gaps
• Defining the real needs
According to a 2021 White Paper on Elderly Health Insurance Needs, published by Pacific Life Re in collaboration with PingAn Health and Shanghai University of Finance & Economics, most people hold a positive attitude towards purchasing elderly health insurance, with nearly 80% of the respondents believing that they should purchase such coverage sooner or later in their life stage.
The white paper also unveiled the public perceptions of the biggest health risks at old age: 75% of the respondents believe that critical illness (CI) would be the biggest health risk when they grow old. This is followed by the degeneration of physical functions and loss of ability to take care of oneself, and chronic diseases and the related complications, accounting for 74% and 71% respectively.
In terms of medical insurance needs, most respondents, regardless of age, occupational status or physical conditions, have the same requirements. Among them, the demand for inpatient medical expenses coverage is the highest, with 85% of respondents opting for this. 74% of the respondents want outpatient and emergency medical expenses coverage and 71% want nursing care expenses coverage during hospitalisation.
In terms of CI needs, 77% of the respondents alluded that a lump sum benefit upon diagnosis of CI is the most important benefit for them. However, reimbursement-type benefits are also welcomed. Thanks to the popularity of million-dollar medical products in China, the special drug benefit which is common as an in-built benefit is also opted by 77% of the respondents, followed by medical expenses coverage of specific elderly diseases.
• Meeting the needs
To develop health insurance products that suit the real needs of the silver generation, insurance players should classify them as a separate group and gain insights into the special risk characteristics of this group. It is time to focus on this underserved segment as the market is hardly ‘niche’ anymore given the growing size of silver generation in China.
At Pacific Life Re, we are committed to support the senior segment, thereby staying true to our vision of making life insurance more accessible to everyone and protecting them when they need it the most. Our regional reinsurance experience, combined with our insights into the Chinese market, enables us to better serve the insurance needs of the silver generation.
From a product perspective, we developed the Elderly Living Care product in 2017, which covers chronic medical conditions that will severely impact the policyholders’ quality of life and independence.
The Elderly Living Care product features an innovative product design and a more simplified health underwriting approach, making the product easier to understand and buy for the silver generation. Since its launch, it has been drawing interest from various insurers across the markets we operate in. In China, we have worked with clients in the local market, thereby solidifying our brand as innovative in the senior segment.
In our view, health insurance products for the silver generation should go beyond just providing a lump sum payment. A holistic consideration of defining and building a sustainable health ecosystem is needed, which includes health insurance, medical care and medication. By analysing the data on medication and hospitalisation expenses of the senior group and using digital tools to manage overtreatment, we can significantly reduce medical costs. In short, the white paper calls for improving the efficiency of social medical insurance and avoiding lengthy claims processes, thereby making insurance more affordable for the silver generation.
The scale of the opportunity is enormous and to meet this demand, action from the entire industry is needed. At Pacific Life Re, we will continue to do our part in bridging the gaps in the market supply for this segment by leveraging our expertise on big data analytics, product innovation and technology. A 
Ms Vivian Wei is the China representative at Pacific Life Re.

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