In the blink of an eye, 2023 is coming to an end. What kind of progress has been made in the life insurance market in the past year, and what changes have been made?There are both unbearable and unbearable, but also heart-to-heart.
Looking back is for a better way forward. Although the growth of life insurance companies' premiums has slowed down since August, the scheduled interest rate reduction and the implementation of the bancassurance channel's "integration of newspapers and banks" have slowed down, according to the latest disclosed data, life insurance companies' premiums have generally maintained a positive growth trend since the beginning of this year, and the value of new business has also progressed steadily.
As the main channel for the development of the life insurance industry, the traditional "crowd tactics" of the individual insurance channel are no longer suitable for new business needs.
The capital replenishment of life insurance companies has also blown a new wind, and the perpetual bond issuance plans of Taikang Life Insurance, Pacific Life Insurance, ABC Life Insurance, PICC Health, and Taiping Life Insurance have been approved one after another.
In terms of health insurance products, tax-advantaged health insurance has ushered in favorable policies, and some short-term health insurance products have ushered in strict supervision and regulation of thorough investigation, but Huimin Insurance, which has been in full swing in recent years, has yet to clarify the next direction.
In the field of pension insurance, a series of "combination punches" have been launched - the management measures for pension insurance and long-term care insurance have been implemented this year, and the five-year tax extension pension insurance has come to an end.
On the one hand, the strict regulatory situation remains unchanged, and on the other hand, it is also "loosening" life insurance companies to release space for the internationalization and market-oriented development of insurance companies. Looking forward to 2024, the value of new life insurance business is expected to continue to grow, as the capital market comes out of the downturn, the income of life insurance on the asset side is expected to improve, and savings insurance products will still have a certain competitiveness in the current market environment, which is conducive to the steady growth of premiums.
The growth rate of premiums has been mixed, and there has been a lot of improvement in new business
Against the backdrop of the expected adjustment of the scheduled interest rate and the rising demand for savings insurance by residents, the premium income of life insurance business has fluctuated periodically this year, but the overall growth has been good.
Judging from the latest premium data of the five major listed insurance companies, in the first 11 months of this year, PICC Life Insurance, Ping An Life, Taibao Life Insurance, Chinese Life and Xinhua Insurance achieved original premium income of 972 respectively6.7 billion yuan, 43394.9 billion yuan, 22397.7 billion yuan, 614.6 billion yuan, 15973.8 billion yuan, a year-on-year increase9%。
Since the beginning of this year, the net interest margin of banks has been under pressure, especially since the transformation of bank wealth management net worth, bank capital guaranteed wealth management products have almost been withdrawn. In addition, the capital market continues to be in a downturn, so even if the predetermined interest rate is lowered to 3%, savings insurance products will still be competitive in the market.
According to the latest report released by the Swiss Re Research Institute, the average annual growth rate of global premiums is expected to be 22%, up from 1 in the past five years (2018-2022).6% average. Global savings premiums are expected to increase by 1$7 trillion to $4 trillion. As a result, the growth of the life insurance industry will increase significantly over the next decade.
Driven by the growth of new policies, the value of new business of life insurance companies is also gradually increasing. In the past two years, as life insurance has entered a stage of deep transformation and the external environment is complex and uncertain, the value of new business of insurance companies has declined one after another, which once caused market concerns.
Since the beginning of this year, with the economic recovery, insurance companies have begun to reap the fruits of transformation, creating conditions for the return of new business value to positive growth. According to the research report of China Securities Construction Investment, the value of new business of China Life, Ping An and CPIC increased year-on-year respectively in the first three quarters8%。
Cai Qiang, general manager of CPIC Life Insurance, said frankly at CPIC's 2023 interim results conference that CPIC began to promote the transformation of Changhang on January 1 last year, and since the second half of last year, the company has maintained new business value growth for four consecutive quarters, and the transformation results have achieved initial results.
Chen Xinying, former co-CEO of Ping An of China, said that the value of new business has increased significantly, due to macro-level factors, as well as the impact of Ping An's own "4 (channel) + 3 (product)" life insurance reform.
China Securities Construction Investment Research Report believes that looking forward to 2024, the value of new life insurance business is expected to continue to grow, favorable policies are expected to boost the continued recovery of the macro economy, and the investment income on the asset side is expected to pick up.
Omni-channel "newspaper and bank integration", the whole industry elite soldiers
Change requires the courage to break through the kettle, and the supervision of the "knife" of the increasingly high handling fees to the bancassurance channel this year.
In order to rectify the situation of relatively extensive expense management of insurance companies, the supervision has accelerated the implementation of the "integration of reporting and banking" in the bancassurance channel. From the issuance of regulations in August, to the implementation of rectification by institutions in September, and then to the intensification of investigation and punishment in October, it can be said that the "wait-and-see period" given by supervision to market entities is not long.
With the strict implementation of the new policy of "integration of newspapers and banks", the "freezing period" of the bancassurance channel is also coming. According to industry exchange data, the new single premium paid by the bancassurance channel in October was only 4.3 billion yuan, a year-on-year decrease of 76%. On October 20, the regulator also revealed at the press conference on the data information of the banking and insurance industry in the third quarter of 2023 that the preliminary estimate is that the commission rate of the bancassurance channel has decreased by about 30% compared with the previous average.
The high cost of bancassurance channels not only disrupts the market order, but also the root cause of problems such as false insurance, false fees, and false surrenders, and is also the soil for breeding "first-class black industry" and affecting the high-quality development of the industry.
Rectifying the high handling fees of the bancassurance channel is one of the focus points of the regulator to reduce the cost of debt in the industry, and the core purpose is to prevent risks. In addition, in addition to the bancassurance channel, the next individual insurance and agency channels will also implement the "integration of newspaper and bank" policy.
In fact, the above series of actions are all sending a signal: the traditional way of relying on interest rate differentials and fees to do large-scale and make profits is no longer sustainable, and only by accelerating change can we gain a firm foothold.
In terms of the construction of talent teams, insurance companies have abandoned extensive development models such as manpower and turned to the elite route of optimal growth and cultivation. In terms of scale, since 2021, listed life insurance companies have begun to make drastic efforts to clean up people. The decline rate of tens of thousands, hundreds of thousands, or even millions has rewritten the history of the once "million marketing army". The size of the team has shrunk but the production capacity has increased, which is the consensus of major insurance companies on the "quantity and quality improvement" of the first-class team.
In the third quarterly report of the five major listed insurance companies, Chinese Life and Ping An both mentioned per capita production capacity and personal insurance manpower data. According to the third quarterly report of Chinese Life, as of the end of September, the sales force of individual insurance was 660,000, a decrease of 1,000 compared with JuneAccording to Ping An's third quarterly report, as of the end of September, the number of individual life insurance sales was 360,000, a decrease of 3 from the end of June7%。
Although the number of sales** is declining, the per capita production capacity is rising. According to the third quarterly report of Chinese Life, the monthly average first-year premium paid by the individual insurance sector increased by 28 percent year-on-year6%；According to Ping An's third quarterly report, the per capita new business value in the first three quarters of 2023 increased by 94% year-on-year4%。
Not only that, in the context of the reform of the life insurance marketing system and the promotion of high-quality development by supervision, the "big brother" China Life personally came down, and Chinese Life Nianfeng Insurance ** Co., Ltd. was officially unveiled during the year. Ping An Life unveiled the new brand "Ping An MVP", which is a major initiative for Ping An Life to once again launch the cultivation of sophisticated marketing talents after "You+", and it is the first time in the 30 years since the establishment of Ping An Life to name the image of the first person with the word "Ping An", demonstrating its ambition and strategy.
It is imminent for capital to "replenish blood", and perpetual bonds will relieve hunger and thirst
Since the implementation of the "C-ROSS II phase", the core solvency adequacy ratio of insurance companies has dropped significantly, and it is urgent to replenish core capital.
As of the end of the third quarter of 2023, the core solvency adequacy ratio of insurance companies fell sharply to 126% from 220% at the end of 2021, according to data disclosed by the State Administration of Financial Regulation.
Shareholder capital increase is the most direct way for insurance companies to replenish capital and improve core solvency adequacy ratios, and a number of life insurance companies have increased capital and shares this year. For example, recently, CITIC Prudential Life Insurance and Three Gorges Life Insurance have issued capital increase plans, both of which are participated by the original shareholders in the capital increase, of which CITIC Prudential Life Insurance plans to increase its capital by 2.5 billion yuan, and Three Gorges Life Insurance plans to increase its capital by 5500 million yuan.
It is worth mentioning that the solvency of Three Gorges Life Insurance has been "critical". According to the solvency report of Three Gorges Life Insurance in the third quarter of 2023, as of the end of the third quarter, the company's core solvency adequacy ratio and comprehensive solvency adequacy ratio were56%, the last two comprehensive risk rating results are D, which is already a solvency substandard company.
For insurers that urgently need to increase core capital and have insufficient capital increase capacity of major shareholders, the issuance of perpetual bonds is also an option. Although insurers have a variety of capital replenishment tools to choose from, only preferred shares and perpetual bonds can be included in the core Tier 2 capital, while capital supplementary bonds and subordinated term bonds can only supplement subsidiary capital, but cannot supplement core capital.
More than a year after the release of the insurance company's perpetual bond policy, in September this year, Taikang Life Insurance "broke the ice" of insurance companies' perpetual bonds. After the approval and listing of Taikang Life's perpetual bonds, the issuance of perpetual bonds by a number of life insurance companies has also been approved by regulators: Pacific Life Insurance has been approved to issue perpetual bonds of no more than 20 billion yuan, ABC Life Insurance has been approved to issue perpetual bonds of no more than 2 billion yuan, PICC Health has been approved to issue perpetual bonds of no more than 2.5 billion yuan, and Taiping Life has been approved to issue perpetual bonds of no more than 20 billion yuan.
In the weak state of the capital market, the performance of insurance companies in the fourth quarter is likely to continue to be under pressure, and the endogenous capital replenishment method of relying on profit retention to supplement core capital is not optimistic. The successive approvals of perpetual bonds of insurance companies have opened a new dawn for exogenous capital replenishment, allowing insurance companies to "take a breath" under the pressure of core capital.
However, as a capital supplementary bond with no fixed maturity, perpetual bonds face certain non-redemption risks, and investors need to carefully consider the operation of their issuers. A number of brokerage research reports also pointed out that supply and demand may be concentrated in the head insurance companies.
Health insurance ushered in a reorganization, and tax incentives were significantly expanded
Under the in-depth promotion of the "Healthy China" strategy, health insurance products are facing stricter regulatory norms while ushering in "expansion".
This year, the health insurance product that ushered in a blockbuster policy is tax-advantaged health insurance. On July 6, 2023, the State Administration of Financial Supervision issued the Notice on Matters Concerning the Application of Preferential Individual Income Tax Policies for Commercial Health Insurance Products, so that tax-advantaged health insurance can be fully optimized and expanded in three dimensions: products, insured populations and business entities.
The design concept of tax-advantaged health insurance products is both advanced and limited at the time of launch. In terms of advancement, in 2015, there were very few medical insurance products that could take into account the non-social insurance expenses insurance and the insurance with illness and guaranteed renewal, especially for the sick group, "what you buy is what you earn". However, the complexity of the insurance process, the low amount of preferential tax treatment, and the many product restrictions also lead to the great limitations of tax-advantaged health insurance.
The above-mentioned "Notice" issued by the regulator in July clarifies the next step for the development of tax-advantaged health insurance. From the perspective of products, the scope of commercial health insurance products that can enjoy the preferential individual income tax policy will be expanded from fixed form of medical insurance to medical insurance, long-term care insurance and illness insuranceFrom the perspective of the insured group, from only the policyholder himself can enjoy tax incentives to the policyholder himself, or his spouse, children or parents;From the perspective of business entities, companies that can operate tax-advantaged health insurance have changed from a list system to only set access criteria.
While tax-advantaged health insurance products have obtained regulatory "rain and dew", the "correction" of short-term health insurance is also continuing. A Smart Insurance has learned that the Beijing Supervision Bureau of the State Administration of Financial Supervision recently issued a notice, requiring relevant institutions to assist in providing some of the products on sale that have been revised and newly developed since August 2022, including special drugs for some diseases, targeted drug health insurance products, health insurance products with insurance liabilities including some dental products, and health insurance products in cooperation with some third parties. The content of the application should be submitted before noon on November 28.
Judging from the content of the notice, this inspection is similar to the "drug reinsurance" business that the regulator required insurance companies to self-inspect in August last year. At that time, the main object of the investigation was also special drug insurance, in this form, the insurance company was reduced to a channel for "selling drugs", although it could benefit some patients, help some pharmaceutical companies increase sales, and let insurance companies do large-scale faster.
"Drug replacement" is not the only tool for insurance companies to pursue scale one-sidedly, and before, there have been routines such as "0 yuan in the first month" and "Rubik's Cube business" in the market, all of which have been stopped by regulators.
For some health insurance products, the regulator adheres to the principle of "act when it is time to act", or further support or further regulate it. However, there are still some health insurance products that need to be clarified by regulators and clear up the "fog" of the way forward, such as the urban customized commercial medical insurance (commonly known as "Huimin Insurance"), which has been in full swing in recent years.
Huimin Insurance began to take shape in 2015 and was officially promoted in 2020, becoming a phenomenal hit in 2021 with the advantages of low insurance threshold, low premium, and high sum insured. By the end of 2022, 263 products had been launched in the market, covering 29 provinces and municipalities, serving nearly 300 million people.
However, in recent years, the controversy in the industry over the sustainable development of Huimin Insurance has been increasing, among which the lack of good user experience and sense of access to claims and services among the insured healthy people has led to the problem of low insurance participation rate and low renewal rate of projects in some areas, which has caused Huimin Insurance projects to fall into the dilemma of "death spiral".
We will make every effort to escort the elderly and stimulate the silver economy
In the context of the gradual deepening of the aging of society, the pension industry will become a new growth point of China's economy. How to face the coming era of "silver economy", supervision has begun to "fall into chess".
One of the most important moves in the field of pension insurance this year is the regulation of pension insurance companies to make clearer regulations. On December 15, the State Administration of Financial Supervision and Administration officially issued the Interim Measures for the Supervision and Administration of Pension Insurance Companies.
As the first new regulatory regulation for pension insurance companies, the "Measures" further clarified that pension insurance companies should take the path of professional development, actively participate in the construction of a multi-level and multi-pillar pension insurance system, focus on the main business of pension, innovate pension financial products and services, and meet the diversified pension needs of the people.
Compared with the Consultation Paper, the Measures change the expression of "health insurance" to "long-term health insurance" in terms of business scope, and clarify that pension insurance companies whose business scope exceeds the provisions shall complete the change within three years. This means that in the future, pension insurance companies will not be allowed to sell short-term health insurance, and the business scope, organizational structure and product structure of some companies will also be adjusted.
When longevity meets disability, the elderly are under heavier pressure. The emergence of long-term care insurance has relieved the pressure on many families. However, it is such a type of insurance that benefits the country and the people, but it is often used by some criminals, and even deviates in some disability level assessment links, which makes this protection change before it reaches those who really need help.
To this end, in order to strengthen the assessment and management of long-term care insurance disability level and protect the legitimate rights and interests of the insured, on December 15, the National Health Insurance Administration and the Ministry of Finance jointly formulated the "Long-term Care Insurance Disability Level Assessment Management Measures (Trial)", which made relevant provisions on long-term care insurance assessment institutions, evaluators, evaluation standards, evaluation processes, etc., clarified the boundaries of responsibilities, strengthened supervision and management, and at the same time can avoid some fraud, so that those who really need it can get help, so that long-term care insurance funds can be implemented.
Hsinchu is higher than the old bamboo branches, all by the old cadres for support", in the pension insurance has a new layout at the same time, some of the "outdated" pension insurance "chess pieces" that have been proved in practice to be "outdated" to withdraw from the "chessboard" - such as the pilot five-year tax extension pension insurance officially ended, will be on the same track as personal pensions. According to the notice of the State Administration of Financial Regulation, the entire bridging work was completed within the year.
Since the birth of the personal pension system last year, the tax extension pension insurance has fallen into the embarrassing situation of "crashing", the tax is similar, but the convenience of purchase and national recognition are far less than the former, and the pilot five years of popularity is insufficient, so the timely "exit" is also a timely "stop loss".
The future of the institution is promising
Looking ahead to the outlook for life insurance in 2024, institutions are positive and optimistic.
We are optimistic about the growth of life insurance sales in 2024, according to the Huatai ** research report. Even with the high base problem brought about by high growth in 2023, we believe that it may not change the trend of sales recovery. With the reduction in pricing rates, we also see room for improvement in product margins. Bancassurance business is likely to continue its high growth trend in 2024, and the requirement of "integration of newspapers and banks" may drive banks to sell more insurance products and help improve product margins. Participating insurance can help reduce the sensitivity of profits to interest rates, and in the context of lower pricing rates and new accounting standards, insurers have an incentive to increase the sales of participating insurance, and we believe that companies may start to pay attention to and deploy participating insurance again in 2024.
United Credit believes that the overall business structure of the insurance industry continues to be optimized, the business structure transformation of life insurance companies continues to advance, and with the continuous improvement of the three-pillar system of China's social pension, the future social pension industry may usher in continuous development.
According to the BOCOM International Research Report, it is expected that the growth rate of new business value of life insurance will slow down on a high base in 2024, and it is estimated that the value of new business of listed Chinese life insurance companies will increase by 18% year-on-year in 2023 and will be flat year-on-year in 2024, and the liability side of the life insurance industry is still in the process of transformation. As the Federal Reserve ends the process of raising interest rates, the yield of U.S. Treasury bonds is expected to decline, which is expected to improve the external macro environment faced by A-shares and Hong Kong ** markets, and the accounting standards are more comparable, and the return on investment on the asset side of the insurance industry is expected to improve in 2024.