Private Health Insurance in China Will Surge Fivefold to RMB 1.1 Trillion by 2020, Study Finds

Reimbursement Insurance Will Be the Fastest-Growing Area in Chinese Health Insurance, Outpacing Critical-Illness Policies, According to a Study by BCG and Munich Re

ID: 1454194
recent pressrelease next pressrelease

(businesspress24) - BEIJING, CHINA -- (Marketwired) -- 08/23/16 -- The market for private health insurance in China will surge fivefold to RMB 1.1 trillion by 2020 ($167 billion), from RMB 241 billion ($36.7 billion) in 2015, as middle-class and wealthy Chinese look for an alternative to the public insurance system. A new report by and , , reviews the changing consumer expectations and government efforts to encourage more private health care options that are driving this substantial growth.

The fastest growth is expected in reimbursement policies, which are more expensive but more flexible than the critical-illness policies that many Chinese have today. (Critical-illness insurance pays a lump sum if an insured person is diagnosed with a covered medical condition; reimbursement insurance pays on an ongoing basis if a health problem requires multiple medical consultations or hospital visits.) "Private reimbursement insurance makes tremendous sense in China. There isn''t yet a mass market for it because of the cost. But there is a lot of interest and we expect to see many new products in the next few years," explains Ying Luo, a partner in BCG''s Beijing office and a coauthor of the report.

A survey of Chinese consumers reveals the opportunity for carriers: the most likely purchaser of reimbursement insurance today is 35 to 55 years of age, married with children, with a minimum annual household income of RMB 200,000 ($30,333). This group is expected to grow to over 40 million Chinese by 2020. The wealthiest consumers in this group would be willing to pay between RMB 30,000 and 60,000 ($4,550 to $9,100) for a reimbursement policy covering a family of three.

"Today, private reimbursement policies are generally sold through group insurance. Purchases by individuals are still rare, and pure reimbursement players in China simply haven''t been able to make money due to the small size of the market. This is set to change," says John Wong, head of BCG''s Greater China Health Care practice.

The authors of the report expect increasing profitability, partly because of government policies that support the privatization of insurance and health care, like tax breaks for private health insurance. Rising demand and encouraging government policies have already led to a quadrupling of the number of private hospitals, to more than 12,500 today from about 3,200 in 2005.

"Insurers have enormous opportunities if they start formulating the appropriate strategies now," predicts Doris Hoepke, member of Munich Re''s board of management, responsible for Munich Health. "To participate in the reimbursement market, organizations need to have a clear understanding of target customers and their needs, which should be reflected in innovative products tailored for these segments. Other requirements are an efficient claims and operations management, which guarantees customer satisfaction while keeping internal costs low, attractive and user-friendly sales channels, and an approved network of hospitals and health service providers."

The report outlines the six key requirements for insurers looking to compete in reimbursement insurance in China. A pure increase in the size of the market will not guarantee profitability.

The reimbursement market will represent 36% (RMB 400 billion) of the RMB 1.1 trillion private insurance market in 2020. The other 64% will consist of critical-illness policies (dominated by life insurers), which are expected to grow at a slower rate than reimbursement insurance.

"Insurance companies need to understand the characteristics and preferences of different customer segments: the amount of money they are willing to spend on reimbursement insurance and what they expect to receive in return," says Bill Bossany, deputy chief executive of Munich Re, Beijing (Health branch), and a report coauthor. Expertise in analytics and strong data infrastructure are essential in gaining valuable insights and making customer interactions more straightforward.

A copy of the report can be downloaded at .

To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or .

The Boston Consulting Group (BCG) is a global management consulting firm and the world''s leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 85 offices in 48 countries. For more information, please visit .

features the latest thinking from BCG experts as well as from CEOs, academics, and other leaders. It covers issues at the top of senior management''s agenda. It also provides unprecedented access to BCG''s extensive archive of thought leadership stretching back 50 years to the days of Bruce Henderson, the firm''s founder and one of the architects of modern management consulting. All of our content -- including videos, podcasts, commentaries, and reports -- can be accessed by , mobile, , , , and .

Munich Re stands for exceptional solution-based expertise, consistent risk management, financial stability and client proximity. This is how Munich Re creates value for clients, shareholders and staff. In the financial year 2015, the Group -- which combines primary insurance and reinsurance under one roof -- achieved a profit of EUR3.1bn on premium income of over EUR50bn. It operates in all lines of insurance, with more than 43,000 employees throughout the world. With premium income of around EUR28bn from reinsurance alone, it is one of the world''s leading reinsurers. Especially when clients require solutions for complex risks, Munich Re is a much sought-after risk carrier. Munich Re''s primary insurance operations are concentrated in the ERGO Group. ERGO is one of the leading insurance groups in Germany and Europe. ERGO is represented in over 30 countries worldwide and offers a comprehensive range of insurances, provision products and services. In 2015, ERGO posted premium income of EUR17.9bn. In international healthcare business, Munich Re pools its insurance and reinsurance operations, as well as related services, under the Munich Health brand. Munich Re''s global investments (excluding insurance-related investments) amounting to EUR215bn are managed by MEAG, which also makes its competence available to private and institutional investors outside the Group.

More information:

Keywords (optional):

boston-consulting-group, bcg, chinese-health-insurance, healthcare, private-reimbursement-policy,

Company information / Profile:

PressRelease by


PressContact / Agency:

published by: Marketwired
print pressrelease  send to a friend  

Date: 08/23/2016 - 20:00
Language: English
News-ID 1454194
Character count: 3296
Firma: Boston Consulting Group
Ansprechpartner: Feedback to about Pressrelease-id:


Number of hits: 241


Direct Link to this PressRelease:

We would appreciate a link in your News-, Press- or Partner-Site.

Comments on this PressRelease

All members: 9 438
Register today: 0
Register yesterday: 0
Members online: 0
Guests online: 78

Don't have an account yet? You can create one. As registered user you have some advantages like theme manager, comments configuration and post comments with your name.