After nearly three months, the regulatory authorities once again issued a draft for comments on the standardized development of the industry's "phenomenal" products Huimin Insurance.
a. Smart InsuranceIt is learned that the Life Insurance Supervision Department of the State Administration of Financial Supervision recently solicited opinions on the "Notice on the Smooth and Orderly Development of Urban Customized Commercial Medical Insurance (Draft for Comments)". The urban customized commercial medical insurance, commonly known as "Huimin Insurance", has been in operation for more than eight years, and has shown explosive growth in the past four years, and has attracted nearly 300 million people to participate in the insurance.
Compared with the previous version of the Opinion Draft, the overall idea of the latest version of the Opinion Draft remains unchanged, but the last document was issued by the General Office of the State Administration of Financial Supervision and the Office of the National Health Security Administration, and this time it is the Life Insurance Department of the State Administration of Financial RegulationThe last time the receiving body was the local ** general office, this time it is the insurance companies and insurance associations.
There are also a number of adjustments to the expression of the draft opinions, involving functional positioning, overall planning, standardized operation, etc. Among them, "whether Huimin Insurance, which originated from group insurance, can issue a policy in the form of group insurance" is one of the two major concerns of the previous version of the draft. At that time, the expression was "customized medical insurance should be designed as an individual insurance product", without mentioning the form of group insurance, and the new version was changed to "customized medical insurance should be designed for individuals and insurance products purchased by groups not for the purpose of purchasing insurance", and the key issues were deleted "to carry out business in the form of group orders", which means that group insurance products are inclined to be released, and at the same time, the expression "encourage employers to make full use of preferential tax policies and purchase customized medical insurance for employees" was added.
Another major concern of the previous draft is the long-term orientationThe phrase "encourage long-term medical insurance designed with adjustable rates" has not changed in the new draft. According to industry analysts, the design of Huimin Insurance's growth period insurance can improve its sustainability, and the policyholder can obtain long-term stable protection, which will help improve the participation rate of Huimin Insurance. However, the risks faced by underwriting companies may increase, and property and casualty insurers that currently have a high proportion of underwriting but do not have long-term health insurance operating qualifications will be forced out of the market, which will have an impact on the whole market.
Seek change in stability
Huimin Bao twice a month
As a kind of inclusive supplementary medical insurance, Huimin Insurance was first launched in Shenzhen in 2015 and rolled out nationwide in 2020. According to the "2023 Urban Customized Commercial Medical Insurance (Huimin Insurance) Knowledge Graph" (hereinafter referred to as the "Atlas") released by Fudan University last month, as of November 15, 2023, a total of 284 Huimin Insurance products have been launched in various provinces, autonomous regions and municipalities directly under the central government, with a total of 300 million insured people.
However, with the rapid development, Huimin Insurance has also experienced problems in recent years, such as the decline in the number of new products, the extension of the insurance period, the increase in adverse selection risks, and multiple insurances in one city. According to the "Atlas", from 2020 to 2023 (as of November 15), the number of new Huimin Insurance products will be 97, 83, 72, and 27 respectively, showing a year-on-year decline. In addition, due to the large differences in operation in various regions, more than a quarter of the 284 Huimin Insurance products have ceased operation.
In terms of the insurance period, the report "The Connotation, Status and Sustainable Development of Huimin Insurance" released by Chinese Life Reinsurance Company shows that although the total number of insured people is stable, 20%-30% of people withdraw every year, which requires the co-insurance body to pay more costs to acquire new customers to make up for the withdrawal of people, which directly leads to the extension of the insurance period in many places in 2022. A Smart Insurance noted that in 2023, some areas will also extend the insurance period, and theoretically promote the 2024 Huimin Insurance in 2023, and the insurance period should end at the end of 2023, but some regions announced that the insurance period will be extended to the end of January this year, and the protection will still take effect from January 1 this year.
According to various statistics, in 2022, more than seventy percent of the Huimin Insurance projects will have a participation rate of less than 10%, which is undoubtedly a challenge to the sustainability of insurance products that follow the "law of large numbers" (that is, the number of insured people is enough to better diversify risks).
In this context, in order to promote the steady and orderly development of Huimin Insurance, in October last year, the General Office of the State Administration of Financial Supervision and the Office of the National Medical Security Administration issued a draft for comments to the local ** General Office, increasing support for Huimin Insurance from the aspects of functional positioning, overall planning, and support measures. This version of the draft was widely circulated in December last year, triggering widespread discussion.
After nearly three months, the Life Insurance Department of the State Administration of Financial Supervision issued another opinion draft. According to A Smart Insurance, in the latest version of the draft content, the receiving body is the insurance companies and insurance associations, the document is signed on January 8, and all units need to give feedback before January 12. The content is still divided into six parts: clear functional positioning, focusing on overall planning, strengthening standardized operation, improving support measures, improving working mechanisms, and strengthening supervision and management, once again emphasizing the principle of "adhering to market operation and guidance" and voluntary insurance, and proposing that Huimin Insurance should be "orderly connected with basic medical insurance, serious illness insurance and other commercial medical insurance" and "based on relevant data such as local basic medical insurance and serious illness insurance, scientifically determine the level of insurance liability and rate" and other requirements.
It is worth mentioning that during the release of the two versions of the draft, the Property and Casualty Insurance Department of the State Administration of Financial Supervision issued a document on "promoting the high-quality development of the property and casualty insurance industry", and also encouraged "steadily promoting the development of urban customized short-term health insurance, and increasing the penetration rate and penetration of products." Do a good job in financial services for new citizens, and actively participate in the construction of a multi-level medical security system". This also reflects the general idea of supervision to promote the construction of a multi-level medical security system.
Group insurance vs individual insurance
Encourage businesses to "place orders" with tax packages
The general idea remains the same, and some details of the expression have been adjusted. In the previous draft, since the design positioning of Huimin Insurance only mentioned "individual insurance products", and the issues that the State Administration of Financial Supervision and the dispatched agencies should focus on investigating and dealing with included "conducting business in the form of group orders", which was one of the two major points of controversy at that time.
The industry generally believes that Huimin Insurance cannot issue policies in the form of group insurance, which will harm the overall development of the market. The reason is that in order to reduce premiums before, group insurance policy issuance was a common form of policy issuance for Huimin Insurance. This type of group insurance is not an enterprise group insurance, which first sets up a similar unit as an independent policyholder, and everyone insures to the unit, and then issues a policy in the name of individual insurance. According to industry analysts, group insurance can reduce moral hazard, especially in the context of the decline in individual insurance rates, the form of group insurance is conducive to the long-term stability of the first and is a very good guidance mechanism.
In the new version of the Opinion Draft, the positioning of Huimin Insurance has been changed to "insurance products that should be designed for individuals and groups not for the purpose of purchasing insurance", and the expression "conducting business in the form of group orders" has been deleted from the key issues to be investigated and dealt with, releasing a signal of liberalizing group insurance products.
At the same time, the new draft also adds the expression "encourage employers to make full use of preferential tax policies and purchase customized medical insurance for employees". According to public information, Hunan, Shandong, Jiangxi, Hebei and other places have sent Huimin Insurance tax preferential "gift packages" in recent years, such as Hunan Province encourages units to purchase Huimin commercial health insurance for all employees as supplementary medical insurance, according to relevant regulations, in accordance with the calculation of taxable income according to the policy to deduct;Shandong Province proposes that the supplementary medical insurance premiums paid by enterprises for employees in accordance with national policies and regulations can be deducted before enterprise income tax if they do not exceed 5% of the total wages of employees.
In terms of overall planning and standardization, the tone of "one city, one policy" has not changed, but the expression has also been adjusted. "In principle, customized medical insurance projects should be carried out in cities (regions) as units, and the number of projects in each city (region) should be controlled at one;Provinces (autonomous regions) and municipalities directly under the Central Government with a small total population may carry out the work on a district-wide basis. "Adjusted to" customized medical insurance projects are generally carried out in cities (regions) as units, and qualified provinces (autonomous regions, municipalities directly under the Central Government) can be carried out in whole jurisdictions, and the number of projects in each region after feasibility demonstration and risk assessment should not exceed one. An industry insider told Asmart Insurance that this means that the regulator supports the launch of the "provincial version" of the product.
Long vs. short
Long-term orientation, leave it to the market to choose
Another major focus of the previous draft is the long-term orientation, which proposes to "reasonably determine the insurance period according to the protection needs of the people, and encourage the design of long-term medical insurance with adjustable rates", which has not changed in the new draft.
At present, Huimin Insurance is a one-year short-term health insurance business, which can be operated by all kinds of insurance companies. The industry believes that the beneficial side of the long-term orientation is to promote the sustainable development of products, and if more incentives can be given to participants who have been insured for more than five or ten years, it will help to increase the individual insurance rate. Under the relevant mechanism, insurance companies can achieve more accurate risk assessment and pricing, thereby promoting the innovation and development of Huimin Insurance, which is conducive to the stability of the market structure and the sustainable and healthy operation of the system.
But this mechanism is also "harmful". First, the risk faced by the insurance company may increase, and the remaining customers may be high-risk customers after screening year by year;Second, property insurance companies that do not have long-term health insurance business qualifications will theoretically be forced out of the market. According to the data, the proportion of property insurance companies participating in Huimin Insurance is about 70%, and if they cannot continue to underwrite, the market structure will undergo a major adjustment in the short term. However, in view of the new version of the draft opinion, "encourage long-term medical insurance designed as adjustable rates", it is not mandatory to develop long-term medical insurance, and whether to promote long-term medical insurance or short-term medical insurance should also be left to the market.
Combined with some of the difficulties faced by the development of Huimin Insurance so far, the next reform ideas need to be fully discussed and verified to ensure their sustainability. Industry insiders pointed out that there are three indicators that most affect the sustainable development of products, namely the insurance participation rate, the renewal rate and the loss ratio, of which the insurance participation rate is the core.
How to increase the participation rate?Xu Yuchen, a founding member of the Chinese Association of Actuaries, suggested that the first is to enhance product awareness through multi-channel publicityThe second is to enhance the convenience of product purchase channels;The third is to regularly send classic compensation cases and relevant compensation data to the insured personnel and communicate them in a timely manner.
From the perspective of product design, industry insiders said that as the draft guides, Huimin Insurance can appropriately carry out liability grading or rate grouping, determine the rate according to the average risk level of the insured in the group, and do not set prices separately for patients with pre-existing conditions, while appropriately adjusting the deductible and compensation ratio. In addition, the insurance company can conduct a retrospective analysis every year and adjust the rate based on the deviation between the actual payout in the policy year and the expected payout of the protection plan.