HONG KONG/BEIJING: China is nudging insurers to work on cheaper medical cover linked to the coronavirus and is assuring them of fast-track approval for these new products, people with knowledge of the matter said.
The move will mark a shift in the Chinese insurance market where the bulk of existing products are essentially investment schemes and pure healthcare coverage accounts for only about a fifth of the total life insurance premium.
In the last one week, China Life China Pacific Insurance, Ping An Insurance Group and Zhong An Online P&C Insurance, among others, have included coverage for the virus in their existing medical 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, declining to be named as they were not authorized to speak to the media.
The scramble comes as the Chinese province of Hubei, at the epicenter of the outbreak, reported a record surge in the death toll on Thursday and as global health experts warned the epidemic could get far worse before it is brought under control.
China's Banking and Insurance Regulator (CBIRC) last week adjusted actuary rules for healthcare, accident and life insurance as well annuity insurance, which will help lower premiums for such insurance by 3 per cent to 5 per cent.
The sources said the lower premiums and push for cheaper, basic medical cover, were largely prompted by the need to deal with treatment for those who may get infected by the coronavirus.
CBIRC did not respond to Reuters request for comment.
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Despite a weak government healthcare system, private health insurance has been slow to take off in China as insurers mainly catered to demand for high-margin investment-like insurance products.
The high cost of coverage for critical illness products, which typically exclude insurance for epidemics, has put them out of reach of many, industry officials said.
Beijing, however, has been pushing private insurance firms to expand their product coverage to ease pressure on the healthcare system, and as part of a broader crackdown on the sale of shadow banking-linked investment products by insurers.
As a result, health insurance in 2019 accounted for 23 per cent of life premiums in China, up from just 8per cent in 2003, according to Fitch Ratings. In the United States, this figure is about 30 per cent of the life premiums.
That share in China is expected to go up significantly in the near future as individuals rush to buy coverage for treatment of the new virus with a large number seeking admissions to private hospitals, the people said.
The regulator has assured insurers of approvals to launch those products within a few days, they said, compared to the usual timelRead More – Source