Haifei Chen, MSc, FSA
Haifei is General Manager of Gen Re Life/Health China. He is responsible for the development and management of Life/Health business in China. Haifei started his career in Singapore and has nearly 20 years of experience in life insurance and reinsurance industry. Haifei joined Gen Re in March 2006. He has assumed roles of Chief Representative of Beijing Office and Deputy General Manager of Shanghai Branch. Haifei has plenty of experience in pricing, product development and marketing. He holds a Master’s Degree in Science and is a Fellow of the Society of Actuaries (FSA).
陈海飞先生现任德国通用再保险公司寿险/健康险中国区总经理，负责通用再在中国 大陆的寿险及健康险业务开发和管理。他的职业生涯始于新加坡，在寿险和再保险行 业拥有将近 20 年的工作经验。陈先生于 2006 年 3 月加入通用再，历任通用再北京 代表处首席代表和通用再上海分公司副总经理。陈先生在产品定价、产品开发和市场 营销等方面拥有丰富经验。他拥有理学硕士学位，是北美精算师协会正会员（FSA）。
TDI: We have observed that the rise of WeChat and online cross-selling has brought with it an abundance of short-term, low price and high limit health insurance, which has proven particularly popular in China. Can you give some background statistics on growth in online in China and what do you think are the reasons for this, and what are your views relating to this development?
Haifei: From 2011 to 2016, China’s online insurance premium increased from 3.2 billion RMB to 229.9 billion RMB, an increase of more than 70 times. During the same time period, the percentage of total premium contributed by online premium also increased from 0.2% to 7.4%. Many insurance companies have been extensively developing their online presence, and online distribution is quickly becoming a significant distribution channel in addition to the traditional agency and bancassurance channels.
Between 2016 and 2017 we observed that the percentage of total premiums contributed by online sales decreased. This is due to the shrinking of certain lines of business such as car insurance and short-term investment products sold online. However, on the other hand, online premiums are still increasing in other lines of business, particularly for health, accident and term life products. The growth rate for online sales of accident and health insurance exceeded 79% in the first half of 2018.
So, the online channel is becoming a more and more important sales channel for insurers.
We see the following as being the key factors driving sales in China:
- E-commerce and mobile phone culture in China alongside a very well developed and widely used mobile payment system
- Population density whereby people (especially the large group of middle class) are beginning to learn about insurance and buy insurance for the first time
- Products that are easy to understand and meet the needs of the customers
- Sales process which is seamless and convenient
- Prices that are reasonable and acceptable
TDI: What do you think is the next phase of development of online insurance in China? And how will InsurTechs and insurers transition their users from the low price short term life/health insurance to long term life/health plans?
Haifei: According to various surveys and studies, the amount of money people would like to spend on online insurance is still limited, which affects the conversion rate. This also restricts the selling of long-term insurance products, which typically have a larger premium. Additionally, long-term products might have more complicated product features and policy wording. Without a sales agent, it would be difficult for people to understand what they are going to buy. Nevertheless, we have seen the efforts that insurance companies have made to promote long-term products online and a fast growth of online sales of the term life products.
TDI: While investment-linked products were the growth driver for the life insurance industry in most Asian countries in the early 2000s, today, insurers are being encouraged to focus on protection orientated products (particularly critical illness and health insurance products). What do you think is key to life insurers in China successfully making the transition to protection orientated products? Can you share some examples of product innovations in China that are enabling this?
Haifei: The China Banking and Insurance Regulatory Commission (CBIRC) supports insurance companies to grow their business, especially those pursuing protection lines. The insurance companies have some level of freedom to explore more innovative product strategies and distribution methods to grow their business.
Health insurance is a very important component of the China insurance industry. Critical illness and medical insurance dominates the health insurance market in China. In fact, critical illness insurance has been in the market since late 1990s and contributes more than 50% of total health premiums. The product concept is very well received by both agents and clients. Various product designs are available in the market including multiple-pay and severity-based benefits.
Medical insurance is another important product line. The product offering varies from low-end medical product (supplementary to the social security cover, characterised by low sum assured and small premiums) to high-end medical products with a very high sum assured, comprehensive coverage and expensive).
Another notable product development has been the so-called Middle-End Medical product which has become very popular in the market, creating a lot of buzz in the media and receiving a lot of public interest. Compared to the restrictive coverage of traditional medical insurance products, this type of Middle-End Medical product was seen as extremely attractive because of its higher annual limit, higher maximum coverage age, and wider coverage of drugs and services which were not covered by traditional private health insurance. The high deductible amount helped to keep premiums low in spite of the enhanced coverage. Launched in 2016, this perfectly suited the needs of the growing mass affluent segment. The product was hailed as the “nation’s medical insurance” and generated a good sales volume from both online and offline channels.
TDI: The notion of an ecosystem seems especially relevant in China (Ping An Good Doctor or China Life retirement homes). Why do you think we don’t see the ‘ecosystem’ phenomenon in the West?
Haifei: All in all, ecosystems are customer-centric platforms through which the insurance companies are able to provide more products and service to customers, even with products and services from a third-party partner. However, to set up an ecosystem has to be in line with the national conditions. For example, private doctors are popular in western countries, while in China the remote doctor service through platforms like Good Doctor or Best Doctor has been important in the rise of insurance ecosystems.
China has also had the perfect conditions of a rise in mobile payment systems along with social media platforms that can be used for both marketing and fulfilment. WeChat is much more powerful in these respects than say Facebook.
Furthermore, China is still a developing country with a vast territory and large population. One of the problems is geographic difference in economics and resource allocation. A well-developed online ecosystem would help to re-allocate the resources and provide good services to cater for the various needs of people at different regions and social economic status.
TDI: Chinese insurers have capitalised on innovations such as mobile payments, messaging platforms and establishing end to end ecosystems. Similarly, western insurers have excelled in identifying and serving specific market segments (chronic diseases, retirees, niche risks). In light of this, and other different traits of Asian life insurers, what can Asian insurers learn from their western counterparts, and vice versa?
Haifei: Nowadays it is an open world. We learn from each other. Some InsurTech companies in China are expanding overseas and also various foreign InsurTech firms are trying to do business in China. With the Belt and Road initiative, more and more traditional Chinese insurers have set up overseas offices. From 2020, foreign insurance companies will be entitled to own 100% of their Chinese businesses.
I believe that there are a lot of areas for the eastern and western players to learn from each other. One of the key observations is that Chinese InsurTechs would like to try an idea, refine and develop the approaches and strategies continuously. On the contrary, the western firms might prefer to do more research, analysis and repeated proof first before they launch a project.