Rising demand for healthcare and long-term savings products is set to boost prospects for insurers in China, according to a recent survey by KPMG.
For the survey, Securing a bright future: China's insurance sector and the evolution of bancassurance, KPMG interviewed 1,220 Chinese consumers on their insurance purchasing patterns. It identified that customers are primarily purchasing insurance cover to protect themselves in the event of an accident or illness and to secure access to healthcare services.
The most popular products identified by respondents are accident insurance and critical illness coverage, with 66 and 55 percent of respondents respectively covered by these products.
Sam Evans, Insurance Partner, KPMG China, says: "Respondents identified long-term protection for themselves and their families as the most important factor when selecting a product. The Government is also keen to promote long-term products and retirement solutions. We believe legislation to develop the pension sector is an important catalyst to jump start further market reform and create significant momentum in the future."
"The insurers also want to develop long-term protection products rather than simple savings products, a critical step to move the bancassurance channel to a customer centric model."
Providing a high quality service was also identified as the key influencing factor when purchasing an insurance policy.
The survey also found that bank-owned insurers are set to play an increasingly important role in this market and there is likely to be more collaboration between banks and insurers going forwards, as banks focus on closer working relationships with a smaller group of partners.
A majority of respondents said they purchase insurance via agents, with banks a close second. However, when respondents were asked where they would like to purchase insurance in the future, banks emerged more popular than agents in certain areas, including for annuity and investment linked products.
Richard Siu, Director, Head of Insurance Consulting, KPMG China, says: "The distribution models used in China for selling life insurance products are still mainly achieved through the traditional own agency and bancassurance channels with increasing emphasis on building up other direct, digital or alternative channels."
Recent regulations which banned insurance sales people from selling insurance products in bank branches are expected to benefit the sector in the long term, as banks implement staff training and are now responsible for the sale of the insurance product.
Sam Evans concludes: "We expect future regulations to focus on consumer protection, including cleaning up sales practices, reducing mis-selling and improving training of insurance sales staff within banks. Policy holder rights, risk awareness and increasing disclosure of information to policy holders are likely to continue to be targets for new regulations."
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About the Survey
KPMG's report, titled Securing a bright future: China's insurance sector and the evolution of bancassurance, surveyed 1,220 people spread evenly across Mainland China. Respondents were typically from the affluent income bracket, with 67 percent earning more than RMB4,000 per month. The majority were university educated and employed in the professional or white collar sectors. They were relatively young, with 76 percent between 20 and 35 years of age.
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 150 countries and have 138,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
KPMG China has 13 offices (including KPMG Advisory (China) Limited) in Beijing, Shanghai, Shenyang, Nanjing, Hangzhou, Fuzhou, Xiamen, Qingdao, Guangzhou, Shenzhen, Chengdu, Hong Kong and Macau, with around 9,000 professionals.