Insurers can grow short-term health insurance by broadening the product mix, serving specific groups such as older people, and bundling insurance with healthcare services, says Swiss Re Institute.
In a report titled “Short-term health insurance: a growth engine for China's P&C insurers”, Swiss Re Institute The report says that short-term health insurance can drive growth for non-life insurers in China and may help to offset the non-life business hit from motor detarification in 2020 and 2021.
Short-term health insurance fills the gap between basic (but low-coverage) public health insurance and traditional long-term health insurance, primarily by reimbursing medical expenses.
A majority of health insurance participants surveyed for Swiss Re Institute research in 2020 expected short-term health insurance premiums to reach 20-30% of China's health insurance market and lead the growth of P&C insurers in the next three years.
Insurers wrote more than CNY84bn ($13bn) of the policies in 2019, 12% of the CNY707 bn total health insurance premiums (2015: 9.5%).
Non-life insurers are the major players in this market and short-term health insurance represented 8.5% of total non-life premiums in the first 11 months of 2020, up from 2.7% in 2015.
The growth outlook is positive. Health insurance has strong policy support as the government seeks to expand access to healthcare while reducing the fiscal burden.
The CBIRC forecasts health insurance premiums to reach CNY2tn annually by 2025, an implied 20% annual growth rate. The government's recent 14th Five Year Plan (for 2021-2025) also highlights the role of health insurance in the multi-layer social security system.
Health insurance density and penetration in China are low relative to advanced markets. For example, life and health insurance density in China was $185 in 2018, versus $2,670 in the US. China is also ageing rapidly and medical expenses are higher for its older people. The country had more than 254m people aged 60 or older in 2019, 18.1% of the population. Other growth drivers include digitalisation, which is energising health insurance by enabling interactive online sales and better claims processing; as well as rising public risk awareness since COVID-19.