The Chinese life insurance industry is plagued with homogeneous products and commodity offerings. As a result, and in an attempt to differentiate offerings, life insurers are shifting focus to related industries that supplement traditional insurance products and services. For instance, Union Life is developing retirement communities outside urban hubs including more than 130,000 square meters of land in Wuhan, capital of Hubei province in Central China, and is busy securing more land for retirement communities in other regions such as Hefei of Anhui province, Shenyang of Liaoning province and Guangxi Zhuang autonomous region.
Furthermore, Union Life has created differentiated life insurance products which guarantee accommodation for the policyholder in such retirement communities for their golden years after they reach a particular age as stipulated in the insurance policy. For example, one of Union Life’s products requires policyholders to pay CNY 48,000 (US$7,890) a year which includes the right to reside in the community after they turn 70. According to Union Life, this is the first insurance product in China, which provides a return in kind to policyholders.
Most insurers see such retirement community developments as a long-term investment rather than representing a short term impact. To capitalise on this opportunity, other insurers like Taikang Life, China Life Insurance, Ping An Insurance and New China Life are making similar moves into the OAP care market.