China’s life insurance set to break through US$890 billion barrier by 2028
China’s life insurance set to break through US$890 billion barrier by 2028 | Insurance Business Asia
Life & Health
China’s life insurance set to break through US$890 billion barrier by 2028
Economic recovery and regulatory developments will lead the charge for the sector
Life & Health
By
Kenneth Araullo
The Chinese life insurance industry is anticipated to expand at a compound annual growth rate (CAGR) of 9% from 2024 to 2028, with direct written premiums (DWP) expected to increase from CNY4.0 trillion (US$597.1 billion) in 2024 to CNY5.6 trillion (US$893.2 billion) in 2028.
Projections from GlobalData indicate that the growth in China’s life insurance sector in 2024 is estimated at 9.6%. This increase is attributed to factors such as economic recovery, favourable regulatory changes, and a heightened awareness of health and financial planning following the pandemic, leading to a rise in demand for whole life and personal accident and health (PA&H) insurance policies.
GlobalData insurance analyst Manogna Vangari observes a rebound in growth for China’s life insurance industry.
“After witnessing a slower growth of 2.8% in 2022, the Chinese life insurance industry is expected to witness a double-digit growth of 13.7% in 2023, driven by economic recovery and the relaxation of the zero COVID policy in December 2022, which has helped in increasing the employment rate and household disposable income,” Vangari said.
Breaking down China’s life insurance segments
Whole life insurance is the dominant segment in the Chinese life insurance market, projected to comprise 78.3% of the life insurance DWP in 2023. This demand is driven by demographic factors like an aging population and high life expectancy. According to GlobalData’s Macroeconomic Database, the population above 65 years old in China increased from 184.6 million in 2021 to 191.6 million in 2022 and is expected to reach 248.4 million by 2030.
Additionally, the growth of high-net-worth individuals (HNWIs) in China, averaging a 9.8% increase annually from 2018 to 2022, further bolsters the whole life insurance market. The segment is expected to grow at a CAGR of 10% between 2024 and 2028.
PA&H insurance, as the second-largest line, is estimated to represent 21.4% of the life insurance DWP in 2023. Forecasted to grow at a CAGR of 4.8% from 2024 to 2028, PA&H insurance benefits from increasing health consciousness post-pandemic and the needs of an ageing population.
“Rising health insurance premiums due to an increase in the medical inflation rate will also support PA&H insurance growth. A higher rate of acute diseases, a rapidly aging population, and strong healthcare utilisation are leading to an increase in healthcare premiums in China. Additionally, government initiatives aimed at extending health insurance benefits to a larger population will also aid PA&H insurance growth,” Vangari said.
Recent regulatory developments, such as the National Administration of Financial Regulation’s expansion of personal income tax incentives to various commercial health insurance plans in July 2023, and the launch of a private pension scheme pilot in November 2022, are expected to positively impact the life insurance sector.
Universal life and endowment insurance products collectively constitute a minor 0.3% share of the life insurance DWP in 2023.
“China is projected to become a super-ageing society by 2030, which will continue to create the demand for life insurance products. A growing affluent population, increasing awareness of health and financial protection, and positive regulatory developments will support life insurance growth in the country over the next five years,” Vangari said.
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