The Chinese life insurance industry is expected to grow at a compound annual growth rate (CAGR) of 9% from 2024 to 2028, with direct written premiums (DWP) rising from CNY4.0 trillion (US$597.1 billion) in 2024 to CNY5.6 trillion (US$893.2 billion) in 2028.
According to GlobalData’s projections, China’s life insurance sector is expected to grow by 9.6% in 2024. This increase is attributed to factors such as economic recovery, favourable regulatory changes, and heightened awareness of health and financial planning following the pandemic, leading to an increase in demand for whole life and personal accident and health (PA&H) insurance.
GlobalData Insurance Analyst Manogna Vangari sees a resurgence in growth for China’s life insurance industry.
“After experiencing slower growth of 2.8% in 2022, China’s life insurance industry is expected to post 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 increase the employment rate and household disposable income,” Vangari said.
Breaking down China’s life insurance segments
Whole life insurance is the dominant segment in China’s life insurance market, projected to account for 78.3% of life insurance DWP in 2023. This demand will be driven by demographic factors such as an ageing population and high life expectancy. According to GlobalData’s Macroeconomic Database, the population aged 65 and over in China will increase from 184.6 million in 2021 to 191.6 million in 2022, and is expected to reach 248.4 million by 2030.
In addition, the growth of high net worth individuals (HNWIs) in China, which will increase at an average annual rate of 9.8% from 2018 to 2022, will further support the overall 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 segment, is estimated to account for 21.4% of the life insurance DWP in 2023. Projected to grow at a CAGR of 4.8% from 2024 to 2028, PA&H insurance is benefiting from increased health awareness 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 the growth of PA&H insurance. A higher rate of acute illnesses, a rapidly ageing population and high healthcare utilisation are leading to an increase in healthcare premiums in China. In addition, government initiatives to extend health insurance benefits to a larger population will also support PA&H insurance growth,” said Vangari.
Recent regulatory developments, such as the National Administration of Financial Regulation’s extension of personal income tax incentives to various commercial health insurance plans in July 2023 and the launch of a pilot private pension scheme in November 2022, are expected to have a positive impact on the life insurance sector.
Universal life and endowment products together account for a small 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 drive 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,” said Vangari.
Elsewhere in the country’s life insurance sector, China Life Insurance recently announced its intention to withdraw from the US Securities and Exchange Commission.
