Chinese life insurance industry to grow by 6.3% a year

Written by Michael Griffiths

01/11/2022

The Chinese life insurance industry is set to grow at a compound annual growth rate (CAGR) of 6.3% a year until 2026, according to forecasts from GlobalData.

In terms of direct written premiums (DWP), GlobalData has estimated the life insurance sector in China will grow from ¥3.1trn ($484.4 bn) in 2021 to ¥4.25trn ($665.6bn) in 2026.

According to the data and analytics company, this would be supported by a recovery in the agency distribution channel and product innovations that address changing demographic requirements.

GlobalData revealed that agencies and bancassurance are the main channels of life insurance distribution in China, accounting for a 60.1% and 30% share in new business DWP in 2021, respectively. The agency channel registered a 2.2% growth in 2021, driven by investments from insurers to upgrade the quality of advisory services through training, while bancassurance recorded growth of 3.9%.

Senior insurance analyst at GlobalData, Deblina Mitra, commented: “Agencies are the main distribution channel for whole life insurance products, which accounted for 75% of life insurance DWP in China in 2021.

“Over 85% of high net worth (HNW) investors in China prefer life insurance in their inheritance planning, which is one of the main drivers of whole life insurance. The affluent population is expected to grow at an average annual growth of 9% over the next five years, boosting the demand for life insurance.”

GlobalData suggested the life insurance industry in China also benefitted from the growing demand for personal accident and health (PA&H) insurance, driven by a rise in private healthcare facilities and disposable income. Life PA&H insurance occupied a 24.5% share of the DWP in 2021, with a CAGR of 13.8% for the period between 2017 and 2021.

Hybrid insurance products, which combine healthcare and protection with savings, have also gained prominence in China.

“Whole life and annuity insurance with riders, such as critical illness and accident, are the other examples of hybrid insurance products in China,” Mitra added. “The large middle-income population, which is expected to reach 90% by 2030, and the ageing demography in China are the key consumers of these products.”

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